All of the following capital budgeting decision models, except for this one, use cash flows as the primary basis for the calculation.
A) Net present value (NPV)
B) Internal rate of return (IRR)
C) Payback period
D) Discounted payback period
E) Accounting (book) rate of return (ARR)

Question

Quizplus · Accepted Answer

Accounting (book) rate of return (ARR) uses accounting measures such as net income instead of cash flows. Therefore, it is the only model listed that does not use cash flows as the primary basis for calculation.

All of the Following Capital Budgeting Decision Models, Except for This