Business Analysts Must Be Aware That the ROI Does Not

question 136

Short Answer

Business analysts must be aware that the ROI does not take into account the time value of ____________________.

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Definitions:

Payback

Payback period refers to the time it takes for an investment to generate enough cash flow to recover its initial cost.

Profitability Index

is a capital budgeting tool that measures the relationship between the present value of cash flows and the initial investment, indicating the value created per dollar invested.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to their present value, determining the potential investment's value.

Cash Flows

The total amount of money being transferred into and out of a business, indicating its financial health.