Unformatted text preview: Two examples of this type of method are the net present value method and the internal rate of return equation. In these calculations, future cash flows are “discounted” from the end result. The result is that every dollar invested now is worth more than future dollars and money in the far future is not worth as much as money in the near future. To get the best picture of what is going on in your capital budget, it is best to at least combine the use of discounted methodology if the organization is going to use a non-discounted approach. Source: http://blog.accountingcoach.com/payback-nondiscounted-capital-budgeting/...
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- Spring '10
- Net Present Value, time value, future cash flows