Net present value and the payback period are examples of discounted cash flow methods used in capital budgeting decisions.

Question

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Net present value (NPV) is a discounted cash flow method used in capital budgeting to evaluate the profitability of an investment or project. However, the payback period is not a discounted cash flow method; it simply calculates the time required for the cash inflows from a project to repay the initial investment, without considering the time value of money.

Net Present Value and the Payback Period Are Examples of Discounted