Which two of the following methods of project analysis are most biased towards short-term projects?
I.Internal rate of return
II.Accounting rate of return
III.Payback
IV.Discounted payback
A)I and II only
B)III and IV only
C)II and III only
D)I and IV only
E)II and IV only

Question

Quizplus · Accepted Answer

Payback and Discounted payback are both focused on the time it takes to recoup the initial investment, and are therefore biased towards short-term projects. Internal rate of return and accounting rate of return take into consideration the time value of money and future cash flows, making them less biased towards short-term projects.

Which Two of the Following Methods of Project Analysis Are