Asked by Nancy Nguyen on May 29, 2024
Verified
Methods that ignore present value in capital investment analysis include the average rate of return method.
Present Value
The current value of a future sum of money or stream of cash flows given a specified rate of return.
Average Rate
A term often used in finance to denote the mean of various rates of interest or exchange rates over a given period.
Capital Investment
Funds invested in a business by the owners or partners for long-term growth and financial stability.
- Discern the assortment of strategies utilized in capital investment analysis, acknowledging their division into present value and non-present value classifications.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
True
Explanation :
The average rate of return method is a capital investment analysis method that relies on accounting information such as net income and book value of assets. It does not consider the time value of money or present value.
Learning Objectives
- Discern the assortment of strategies utilized in capital investment analysis, acknowledging their division into present value and non-present value classifications.