C is corrent. The requirement is to identify the decision-making model that equates the initial investment with the present value of the future cash inflows. Answer C is correct because the internal rate of return determines the interest rate that equates the initial investment with the present value of the future cash inflows.
A is incorrect because the accounting rate of return method computes an approximate rate of return ignoring the time value of money.
B is incorrect because the cost-benefit ratio method computes a ratio of all costs and benefits of a project or investment.
D is incorrect because the payback period method equates investments on the length of time until recapture of investment.
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