The payback method and the accounting accounting rate of return method are both conceptually better than the discounted cash flow models because they are based on cash flows.

Question

Quizplus · Accepted Answer

The payback method and the accounting rate of return method are not based on cash flows; the payback method focuses on the time to recover the initial investment, and the accounting rate of return uses accounting profits, not cash flows.

The Payback Method and the Accounting Accounting Rate of Return