When Comparing the Payback Method and the Accounting Rate of Return

question 84

Multiple Choice

When comparing the payback method and the accounting rate of return methods, which of the following is true? $$\begin{array} { | l | l | l| } \hline & { \text { Profitability } } &{ \text { Time Value of Money } } \\\hline \text { I } & \text { Ignored by both methods } & \text { Ignored by both methods } \\\hline \text { II } & \text { Ignored by both methods } & \begin{array} { l } \text { Used in accounting rate of return, ignored by } \\\text { payback method }\end{array} \\\hline \text { III } & \begin{array} { l } \text { Considered by accounting method, not } \\\text { by payback }\end{array} & \text { Ignored by both methods } \\\hline \text { IV } & \begin{array} { l } \text { Considered by accounting method, not } \\\text { by payback }\end{array} & \begin{array} { l } \text { Considered by both methods } \\\end{array}\\\hline\end{array}$$

• A)IV
• B)III
• C)II
• D)I

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