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Which of the following methods of project evaluation do not discount future cash flows? payback period...

Which of the following methods of project evaluation do not discount future cash flows?

payback period

Accounting rate of return

internal rate of return

both payback and accounting rate of return

Solutions

Expert Solution

ANs- Option D. both payback and accounting rate of return

- Payback period is a method to compute the time when the Initial cost of investment will be recovered from future cash inflows. In Payback period, Future Cash inflows are not discounted,i.e., they do not take into consideration the Time Value of Money.

- Accounting rate of Return is a ratio to compute Average Return, it also do not take into consideration time value of money concept.

jeff jeffy answered 2 years ago
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