Chapter 26, Problem E26.17E

To determine

The Payback period of capital budgeting is based on the concepts of the computation of period in each the investment made in the project will be going to realize back from the project. The Accounting rate of return determines rate of average returns earned by the project based on its investment made, but it does not take in to account the time value of money. The Net present value concept underlies the net return available from the project after considering the present value of inflows and outflow during the whole period of project. The Internal rate of return defined the rate of return which the project will be earning after considering the present value of both inflows and outflows of the project.

The Concepts underlying each method of capital budgeting to match with the statement given need to be determined.