Which one of the following methods considers the time value of money in evaluating alternative capital expenditures?
A) Payback period.
B) Cash flow method.
C) Net present value.
D) Return on average investment.
E) Accounting rate of return.

Question

Quizplus · Accepted Answer

Net present value (NPV) is the only method listed that considers the time value of money by discounting future cash flows to present value. The other methods, such as payback period and accounting rate of return, do not explicitly account for the time value of money.

Which One of the Following Methods Considers the Time Value