The discounted cash flow methods of evaluating capital investments are superior because they consider both the time value of money and the profitability of the investment.

Question

Quizplus · Accepted Answer

The discounted cash flow methods, such as net present value (NPV) and internal rate of return (IRR), take into account the timing of cash flows and adjust them for the time value of money. This allows for a more accurate assessment of the profitability of the investment over the long term. Therefore, the statement is true that discounted cash flow methods are superior because they consider both the time value of money and the profitability of the investment.

The Discounted Cash Flow Methods of Evaluating Capital Investments Are