Which of the Following Methods Ignores the Time Value of Money

question 37

Multiple Choice

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

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

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Definitions:

Investing Activities

Part of the cash flow statement that shows the cash spent on and generated from investments in assets, securities, and acquisitions.

Equipment Acquisition

The process of obtaining physical assets for use in production or operations, often through purchase or lease.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up.

Indirect Method

The indirect method is an approach used in cash flow statements to adjust net income for the changes in non-cash accounts to calculate cash flow from operating activities.