Answer (D) is correct . The accounting rate of return (unadjusted rate of return or rate of return on the carrying amount) equals accounting net income divided by the required initial or average investment. The accounting rate of return ignores the time value of money.
Answer (A) is incorrect because The net present value is the sum of the present values of all the cash inflows and outflows associated with an investment.
Answer (B) is incorrect because The discounted payback method calculates the payback period by determining the present values of the future cash flows.
Answer (C) is incorrect because The internal rate of return is the discount rate at which the NPV is zero.
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