Which of the Following Capital Budgeting Methods Ignores the Time

question 92

Multiple Choice

Which of the following capital budgeting methods ignores the time value of money?

• A) Internal rate of return
• B) Net present value
• C) Profitability index
• D) Payback period

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Definitions:

Uncovered Interest Parity

A financial theory suggesting that expected differences in interest rates between two countries will equal the expected change in exchange rates between their currencies.

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to assess the relative value of currencies.