Of the following techniques of capital budgeting, which one explicitly incorporates an estimate of an interest rate into the basic computation?

Question

Quizplus · Accepted Answer

The net present value method explicitly incorporates an estimate of an interest rate into the basic computation by discounting the cash flows of a project at a specified rate, which reflects the time value of money and the risk associated with the project. The other methods do not explicitly consider an interest rate in their calculations.

Of the Following Techniques of Capital Budgeting, Which One Explicitly