Author Question: Net present value is considered a sophisticated capital budgeting technique since it gives explicit ... (Read 27 times)

ghost! · **on:** Jul 10, 2018

Net present value is considered a sophisticated capital budgeting technique since it gives explicit consideration to the time value of money.

Indicate whether the statement is true or false

Question 2

Ten years ago, Tom purchased a painting for 300. The painting is now worth 1,020. Tom could have deposited 300 in a savings account paying 12 percent interest compounded annually.

Which of these two options would have provided Tom with a higher return?

zoeyesther · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

TRUE

Answer to Question 2

Using financial calculator: PV =- 300, FV = 1,020, n = 10, PMT =0, CPT I: 13
Painting has a higher return (13 percent) in comparison to the 12 percent rate of return from the savings account.