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What is the role of time value of money

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Reference no: EM132817882

Q: What is the role of time value of money in making capital investment decisions?

-If the future cash inflows of the projects are greater than the future cash outflows of the projects, then the project will add value to The Firm.

-If all cash flows are compounded to the end date of the project and then compared to initial outlay, then the project will add value to The Firm.

-If the present value of the benefits of the capital investment exceeds the present value of the cost, then the investment will add value to The Firm.

-If the present value of the initial outlay is greater than the present value of a future cash flows, then the investment will add value to The Firm

Reference no: EM132817882

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