Which capital budgeting metric does not account for time value of money? Group of answer choices...
Which capital budgeting metric does not account for time value of money?
Group of answer choices
Internal rate of return (IRR).
Net present value (NPV).
Profitability Index.
Payback period.
All of these incorporate time value of money in their calculation.
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Homework Answers
NPV = -initial investment + PV of future cash flows
Present value = Future value/(1+i)^n
i = interest rate per period
IRR is the rate which NPV os zero
Profitability index = PV of future cash flows/initial investment
Payback period is time taken to repay initial investment. But it doesnt account time value of the money
hence the answer is Payback period
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Which capital budgeting metric does not account for time value
of money?
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