Choice "C" is correct. Capital budgeting involves the management's evaluation of an uncertain future since it involves long term commitments for asset acquisition and, often involves long term financing decisions as well. Management's decisions on the increased requirement for capital investment and the required return and the cost of capital require evaluation of an uncertain future.
Choice "b" is incorrect. Opportunity cost, while relevant in decision making, is not recorded as a normal business expense.
Choice "a" is incorrect. The accounting rate of return is based on GAAP basis net income and not cash flows and does not consider the time value of money.
Choice "d" is incorrect. The payback method measures risk (return of capital). A significant weakness of the payback method is that it does not consider profitability.