**Contents**show

## Which methods of evaluating a capital investment project use cash flows as a measurement basis quizlet?

Which methods of evaluating a capital investment project use cash flows as a measurement basis? **Payback period, internal rate of return, and net present value.**

## Which of the following method considers the time value of money in evaluating alternative capital expenditures?

In capital budgeting, some of the methods that consider the time value of money when evaluating projects are **the net present value and the internal rate of return**.

## Which of the following capital budgeting decision criteria does not consider time value of money?

**The payback method** is one of the techniques used in capital budgeting that does not consider the time value of money. The payback method simply computes the number of years it will take for an investment to return cash equal to the amount invested.

## What are the methods of evaluating a capital investment?

The most commonly used methods for capital budgeting are **the payback period**, the net present value and an evaluation of the internal rate of return.

## Which two methods of evaluating capital investment projects ignore the time value of money?

Which methods of evaluating a capital investment project ignore the time value of money? **Net present value and accounting rate of return**.

## What does positive IRR mean?

A positive IRR means that **a project or investment is expected to return some value to the organization**. … A negative IRR is indicative of a more complicated cash flow stream that may make the metric less useful.

## Which of the following is an objective of capital budgeting quizlet?

The objective of capital budgeting decisions is **to select investments in real assets that will increase the value of the company**.

## Which of the following is a characteristic of a capital budget?

A capital asset has the following characteristics: **It has an expected useful life of more than one year**. Its acquisition cost exceeds a company-designated minimum amount, known as the capitalization limit. It is not expected to be sold as a normal part of business operations, as would be the case for inventory.

## What is the time value of money principle?

The time value of money (TVM) is the concept **that a sum of money is worth more now than the same sum will be at a future date due to its earnings potential in the interim**. This is a core principle of finance.

## Which of the following cash flows is not considered?

The correct option is (c) **past cash outflows**.

Past cash outflows wouldn’t be considered by the company when they using the net present value method for determining the profitable project.

## Which method considers time value of money for taking capital budgeting decision?

**Internal Rate of Return (IRR):**

This method also considers time value of money.