Which of the Following Investment Criteria Takes the Time Value

question 71

Multiple Choice

Which of the following investment criteria takes the time value of money into consideration?

• A)Payback period
• B)Profitability index
• C)Internal rate of return for borrowing projects
• D)Payback period, profitability index and IRR

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Definitions:

Real Exchange Rate

The exchange rate adjusted for inflation, indicating the purchasing power of a currency relative to another in terms of goods and services.

Purchasing Power

The worth of a currency depicted by how many goods or services can be purchased with one unit of it.

Fiscal Policy

Fiscal Policy involves government spending and taxation decisions aimed at influencing a country’s economic activity.

Monetary Policy

The process by which the central bank or monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure economic stability and growth.