Q. Which of the following is not a disadvantage of rate of return method of capital budgeting? (Solved)
1. It ignores the time value of money
2. It uses the earnings of a project up to the payback period only
3. It does not take into consideration cash flows
4. This method can not be applied to a situation where investment in a project is to be made in parts.
- b. It uses the earnings of a project up to the payback period only