Which method does not consider the time value of money?

Net Present Value

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Internal Rate of Return

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Average Rate of Return

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Profitability Index

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Solution

The correct option is C Average Rate of Return
Average Rate of Return is considered simplified method because it does not use time value of money in evaluating capital investments.
The accounting (average) rate of return (ARR) method calculates the return generated from the average net income expected for each of the years the proposed capital investment is expected to be used in operations

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