A criticism of the rate of return method is that it ignores the time value of money.

Name: A criticism of the rate of return method is that it ignores the time value of money.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The rate of return method does not take into account the time value of money. It assumes that the dollar value of returns is the same over time, irrespective of whether the returns are received at the beginning or end of the investment period. This can lead to an inaccurately high appraisal of the investment.

A Criticism of the Rate of Return Method Is That