Which method for evaluating capital investment proposals reduces the expected future net cash flows originating from the proposals to their present values and computes a net present value?

A) net present value
B) average rate of return
C) internal rate of return
D) cash payback

Net Present Value

A financial metric that estimates the profitability of investments by calculating the difference between the present value of cash inflows and outflows over a period of time.

Capital Investment Proposals

Capital investment proposals are plans or suggestions submitted for consideration to undertake significant spending on projects expected to generate future returns.

Expected Future Net Cash Flows

The projection of cash receipts minus cash payments over a future period, considering all expected future transactions.