Q196
Which of the following techniques of project appraisal does not consider the time value of money?
A.
Benefit cost ratio
B.
Net present value
C.
Internal rate of return
D.
Accounting Rate of Return
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Accounting Rate of Return techniques of project appraisal does not consider the time value of money. Under this method, the asset's expected accounting rate of return (ARR) is computed by dividing the expected incremental net operating income by the initial investment and then compared to the management's desired rate of return to accept or reject a proposal.