If a manager was not concerned with the time value of money, from which two capital budgeting methods should the manager choose?

Question

Quizplus · Accepted Answer

The time value of money refers to the concept that the value of money changes over time due to factors such as inflation and interest rates. If a manager is not concerned with the time value of money, it may indicate that they are not factoring in these changes in value. In this case, the best capital budgeting methods would be ones that do not rely on discounted cash flows, which take into account the time value of money. ARR (average rate of return) and Payback are non-discounted cash flow methods that do not consider time value of money. ARR is based on the average net income of an investment over its entire lifetime, while Payback estimates the amount of time it takes for an investment to pay for itself. Therefore, A) ARR or Payback is the best choice for a manager who is not concerned with the time value of money.

If a Manager Was Not Concerned with the Time Value