The payback method ignores cash flows that an asset generates, whereas the accounting rate of return includes them.

Name: The payback method ignores cash flows that an asset generates, whereas the accounting rate of return includes them.
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The payback method takes into account the cash flows an asset generates, while the accounting rate of return focuses on the profitability of the asset by comparing its net income to its initial investment.

The Payback Method Ignores Cash Flows That an Asset Generates