Which of the following are disadvantages associated with the average accounting

Which of the following are disadvantages associated

This preview shows page 7 - 10 out of 26 pages.

33.Which of the following are disadvantages associated with the average accounting return?I.difficulty in obtaining necessary information to do computationII.exclusion of time value of money considerationsIII.the use of a cutoff rate as a benchmarkIV.the accounting basis of the values used in the computationa.I and IV onlyb.II and III onlyc.I, II, and III onlyd.II, III, and IV onlye.I, II, and IV only
Background image
CHAPTER 9AVERAGE ACCOUNTING RETURNb34.The average accounting return:INTERNAL RATE OF RETURNb35.The internal rate of return (IRR):I.rule states that a project with an IRR that is less than the required rate should be accepted.II.is the rate generated solely by the cash flows of an investment.III.is the rate that causes the net present value of a project to exactly equal zero.IV.can effectively be used to analyze all investment scenarios.INTERNAL RATE OF RETURNe36.The internal rate of return method of analysis:I.may produce multiple rates of return for a single project.II.may lead to incorrect decisions when comparing mutually exclusive projects.III.is generally more popular in practice than NPV.IV.works best for independent projects with conventional cash flows.INTERNAL RATE OF RETURNa37.The internal rate of return for a project will increase if:a.the initial cost of the project can be reduced.b.the total amount of the cash inflows is reduced.c.each cash inflow is moved such that it occurs one year later than originally projected.d.the required rate of return is reduced.e.the salvage value of the project is omitted from the analysis.
Background image
CHAPTER 9INTERNAL RATE OF RETURNc38.The internal rate of return is:INTERNAL RATE OF RETURNd
Background image
Image of page 10

You've reached the end of your free preview.

Want to read all 26 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture