The Payback and Accounting Rate of Return Models Are Conceptually

question 30

True/False

The payback and accounting rate of return models are conceptually better than the discounted cash flow models because they are based on cash flows, and they consider both profitability and the time value of money.

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Definitions:

Accounting Equation

The fundamental equation representing the relationship among assets, liabilities, and owner's equity: Assets = Liabilities + Owner’s Equity.

Creditor

An individual or entity that is owed money by another party, often in the context of loaning funds or issuing credit.

Liability

The financial liabilities or obligations a company is legally bound to settle, which emerge in the process of conducting its business activities.

Owner's Equity

The amount of ownership an individual or entity has in a company, represented by the assets minus liabilities and often seen as the owner's claim against the company's assets.