The capital budgeting method that recognizes the time value of money by discount

Question

The capital budgeting method that recognizes the time value of money by discounting cash flows over the life of the project, using the company's required rate of return as the discount rate is called the: simple rate of return method. the net present value method. the internal rate of return method. the payback method. If investment A has a payback period of 3 years and investment B has a payback period of 4 years, then: A has a higher net present value than B. A has a lower net present value than B. A and B have the same net present value. the relation between investment A's net present value and investment B's net present value cannot be determined from the given information.

Explanation / Answer

Ans 17.   Net Present Value Method

Ans 18,   D   The relation between investment A's net Present value and investment's B's net present value can not be determined from the given informaion.

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