Choice "D" is correct. The internal rate of return method computes the rate of return where net present value equals zero. The method equates the initial investment with the present value of the future cash inflows.
Choice "a" is incorrect. The accounting rate of return anticipates changes in net income and does not consider present value.
Choice "b" is incorrect. The payback period computes the period of time necessary to recover an initial investment generally based on undiscounted cash flows.
Choice "c" is incorrect. The cost-benefit ratio does not equate investment and the present value of cash flow.