Which capital budgeting technique defines returns in terms of income instead of cash flows?

Question

Quizplus · Accepted Answer

The unadjusted rate of return method calculates returns in terms of the income generated by the investment rather than the cash flows. It is calculated by dividing the average annual income by the initial investment. However, this method does not consider the time value of money or the cash flows generated over the life of the project. Therefore, it is not considered the best capital budgeting technique.

Which Capital Budgeting Technique Defines Returns in Terms of Income