Question

which of the following utilizes the time value of money a.payback b.benefit cost ratio c.irr d.none...

which of the following utilizes the time value of money
a.payback
b.benefit cost ratio
c.irr
d.none of the above

Homework Answers

Answer #1

Answer is c.irr

Explanation:

Time value of money is an essential concept of business decision making. TVM concepts are used in lot of decisions in business. IRR is the rate at which present value of cash inflows is equal to the present value cash outflows. We do utilize the concept of time value of money in IRR. To calculate IRR, we calculate present value cash inflows and outflows. To know present of any variable, we do require interest rate and period for discounting. So, process of calculating IRR involves time value of money.

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