Asked by Dionne Duncan on Jun 30, 2024

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Methods that ignore present value in capital investment analysis include the net present value method.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return; used in financial analysis to assess the value of future income.

Capital Investment

The expenditure of funds by a firm to acquire physical assets, such as property, plant, or equipment, to improve its long-term income and profitability.

Net Present Value Method

A method of analysis of proposed capital investments that subtracts the amount to be invested from the present value of the cash flows expected from the investments.

  • Recognize the different methods used in capital investment analysis, including their categorization into present value and non-present value methods.
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salwa albohyJul 01, 2024
Final Answer :
False
Explanation :
The net present value (NPV) method actually takes present value into account, making it a discounted cash flow (DCF) method. Other methods that ignore present value include the payback period method and the accounting rate of return method.