Asked by Haroon Naseer on Jun 14, 2024
Verified
All capital investment evaluation methods use the time value of money concept.
Time Value
The concept that money available today is worth more than the same amount in the future due to its potential earning capacity, which is a core principle in finance.
Capital Investment Evaluation
The process of assessing the profitability and risk of potential investment opportunities, using methods such as net present value, return on investment, or payback period.
- Understand the significance and utilization of the time value of money in making investment choices.
- Differentiate among various methods of evaluating investments and understand their impact on financial decisions.
Verified Answer
AF
Aidil FitriJun 15, 2024
Final Answer :
False
Explanation :
Not all capital investment evaluation methods take into account the time value of money. For example, the Payback Period method focuses on how quickly an investment can be recouped without considering the time value of money, unlike methods such as Net Present Value (NPV) or Internal Rate of Return (IRR) which do.
Learning Objectives
- Understand the significance and utilization of the time value of money in making investment choices.
- Differentiate among various methods of evaluating investments and understand their impact on financial decisions.