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GATE 2026 CH – Question 29

Plant Design and Economics · Depreciation, rate of return, payback period and discounted cash flow · 1 mark · Multiple select

Which of the following methods for calculating profitability does/do NOT consider the time value of money?

  1. rate of return on investment
  2. discounted cash flow rate of return
  3. payback period
  4. net present worth

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Show answer and explanation

Correct answer: (A) rate of return on investment; (C) payback period

Explanation

Rate of return on investment (profit divided by investment) and the payback period ignore when the money is received. Discounted cash flow rate of return and net present worth both discount cash flows to the present, so they do account for the time value of money.