alleryStart learning →Which of these is a technique that ignores the time value of money?
AProfitability index
BModified IRR method
CNet present value
DSimple payback period
Answer & Solution
Correct answer: D. Simple payback period
Simple payback sums undiscounted flows, unlike NPV, PI and IRR which discount cash flows.
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Related questions
Which rule applies to a PI result of 1.092 for an independent project?Perpetual inflow of Rs 12,000 a year at 10 percent against an outlay of Rs 1,00,000 gives A project has NPV zero at 18 percent discount rate. What is its IRR?If IRR exceeds the cost of capital on a conventional project, what is NPV?Which discount rate is often used when discounting project cash flows in NPV?Why is NPV on after-interest cash flows wrong?What is a limitation of the NPV approach regarding non-financial matters?Why is NPV said to have the benefit of being additive?