If Management was not concerned with the time value of money,from which two capital budgeting methods should they choose?
A)IRR or Payback.
B)ARR or Payback.
C)BET or IRR.
D)BET or NPV.
E)NPV or Payback.

Question

Quizplus · Accepted Answer

ARR (average rate of return) and payback do not consider the time value of money. Therefore, if management is not concerned with the time value of money, these two methods would be appropriate. BET (benefit-cost ratio) and NPV (net present value) require consideration of the time value of money, so they would not be suitable in this scenario. Although IRR (internal rate of return) does not explicitly consider the time value of money, it implicitly assumes that cash flows are reinvested at the same rate, which may not be realistic in all situations. Therefore, ARR and payback are the best choices in this scenario.

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