Which of the Following Methods Ignores the Time Value of Money

question 99

Multiple Choice

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

• A) Payback
• B) Internal rate of return
• C) Return on assets
• D) Net present value

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Definitions:

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes (EBIT) to its interest expenses.

Balance Sheet

A financial statement that outlines a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.

Income Statement

An income statement is a financial statement that shows a company's revenues and expenses over a specific period, culminating in net profit or loss.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by stockholders' equity.