Which of the following figures of merit does not directly take into consideration the time value of money?
I.Payback period
II.Internal rate of return
III.Net present value (NPV)
IV.Accounting rate of return
A) IV only
B) I & III only
C) II & III only
D) I & II only
E) I & IV only

Question

Quizplus · Accepted Answer

The Payback Period and Accounting Rate of Return do not directly consider the time value of money. The Payback Period focuses on the time it takes to recover the initial investment, and the Accounting Rate of Return looks at the average annual profit compared to the initial investment, without discounting future cash flows.

Which of the Following Figures of Merit Does Not Directly