Respuesta :
The average rate of return is a method of analyzing capital investment proposals that ignores present value.
Option D is correct.
The method of ignoring the present value in investment analysis is the average rate of return method. A method of ignoring present value in investment analysis is the internal rate of return method.
What does the present value method of investment analysis measure?
Present value is the value of current expected cash flows discounted or subtracted by a discount rate. If the cash flow result or present value is greater than the return from the discount rate, it is worth continuing to invest.
Why is the present value concept used as an investment tool?
This is a useful tool to help you understand how much you should invest for retirement or future purchases, given approximate future goals and expected returns. This concept is based on the fact that money in the present is usually worth more than the same amount in the future.
Question is incomplete , missing part is given below :
Which of the following is a method of analyzing capital investment proposals that ignores present value?
a. internal rate of return
b. discounted cash flow
c. net present value
d. average rate of return
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