Considering the Four Common Methods of Evaluating Investments Payback, Rate

question 12

True/False

Considering the four common methods of evaluating investments payback, rate of return, net present value, and internal rate of return the discounted cash flow methods are superior because they consider both the time value of money and the profitability of the investment.

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Definitions:

Amount Realized

The total sum received from a transaction, including money and the fair market value of any property or services received, before subtracting any costs.

Holding Period

The duration of time an investor holds onto an asset or investment before selling it.

Asset

A resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.

Gain or Loss

The difference in value from when an asset is purchased to when it is sold, determining whether a transaction has resulted in a profit or loss.