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Of the four capital budgeting methods, which ones reflect the time value of money? (Check all that apply).Multiple select question.accounting rate of returnnet present valueinternal rate of returnpayback period

Question

Of the four capital budgeting methods, which ones reflect the time value of money? (Check all that apply).Multiple select question.accounting rate of returnnet present valueinternal rate of returnpayback period

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Solution

The capital budgeting methods that reflect the time value of money are:

  1. Net Present Value (NPV)
  2. Internal Rate of Return (IRR)

The other two methods, Accounting Rate of Return (ARR) and Payback Period, do not take into account the time value of money.

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