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

Question

Quizplus · Accepted Answer

The unadjusted rate of return calculates returns in terms of income generated by the investment, rather than cash flows. It is a simple and easy-to-calculate method that is often used by small businesses or for short-term investments. However, it does not take into account the time value of money, and does not consider the entire life of the investment. Therefore, it should not be the only method used for making capital budgeting decisions.

Which Capital Budgeting Technique Defines Returns in Terms of Income