All of the following statements about the annual rate of return method are correct except that...
All of the following statements about the annual rate of return method are correct except that it
a) compares the annual rate of return to management’s minimum rate of return.
b) indicates the profitability of a capital expenditure.
c) does not consider the time value of money
d) ignores the salvage value of an investment.
Homework Answers
| Ignores the salvage value of an investment. |
| The salvage value of an investment is considered in the calculation of Average Investment. |
| Average investment = (Cost of Investment+Salvage value)/2 |
| Annual rate of return =Annual Net income/Average Investment |
| Annual rate of return does not consider the time value of money as net income are considered for calculation. |
| Annual rate of return is compared to management’s minimum rate of return to assess the profitability of project. |
| Option D ignores the salvage value of an investment is correct |
Add Answer to:
All of the following statements about the annual rate of return method are correct except that...
Which of the following statements is CORRECT? The internal rate of return method (IRR) is generally...
Which of the following statements is CORRECT? The internal rate of return method (IRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects. The discounted payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects. The payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects. The net present value method (NPV) is generally regarded by academics...
5. Which of the following is/are correct? A. If the salvage value is the same as...
5. Which of the following is/are correct? A. If the salvage value is the same as the book value of the asset, then there is a tax effect. B. Book value = initial cost - accumulated depreciation C. After-tax salvage = salvage - Tax Rate x (salvage - book value) D. Both B and C 6. ________ is the most important alternative to Net Present Value. A. IRR B. Payback Method C. Average Accounting Return D. Discounted Payback 7. The...
29. Which of the following is INCORRECT about the annual rate of return method of evaluating...
29. Which of the following is INCORRECT about the annual rate of return method of evaluating Capital project? The calculation is simple . The accounting term used are familiar to management The timing of net cash flows is not considered. d. The time value of money is considered ABC Company wishes to undertake the development a major project in the 7th Ward of New Orleans. It is willing to invest $500,000,000.00 over 10 years time. The Company is considering various...
Which one of the following statements is correct concerning both the dollar return and the percentage...
Which one of the following statements is correct concerning both the dollar return and the percentage return on a stock investment? A) Without the size of an investment, the dollar return has less value than the percentage return. B) The dollar return is more accurate than the percentage return because the dollar return includes dividend income while the percentage return does not. C) The dollar return considers the time value of money while the percentage return does not. D) Dollar...
All of the following statements are correct, EXCEPT: a. Temporary accounts are closed at the end...
All of the following statements are correct, EXCEPT: a. Temporary accounts are closed at the end of the accounting period to retained earnings. b. Asset, liability, and stockholders' equity accounts are referred to as permanent accounts. c. Adjusting entries are necessary when cash flow and the economic transaction occur in the same accounting period d. Revenue, expense, and dividend accounts are described as temporary accounts. e. Closing entries prepare accounting records for the next accounting period. At the end of...
What is the major disadvantage of the internal rate of return method? Select one: a. It...
What is the major disadvantage of the internal rate of return method? Select one: a. It can produce more than one internal rate of return. O b. It ignores the expected service life. c. It discriminates against long-term projects. O d. It complicates the comparison of projects of the different sizes. o e. It ignores the time value of money.
Which of the following statements about investment decision models is true?(calculation steps are not needed)a)The discounted...
Which of the following statements about investment decision models is true?(calculation steps are not needed)a)The discounted payback rate takes into account cash flows for all periods.b)The payback rule ignores all cash flows after the end of the payback period. c)The net present value model says to accept investment opportunities when their rates of return exceed the company’s incremental borrowing rate.d)The internal rate of return rule is to accept the investment if the opportunity cost of capital is greater than the...
Which of the following statements is correct? The internal rate of return (IRR) does not allow...
Which of the following statements is correct? The internal rate of return (IRR) does not allow you to determine whether mutually exclusive projects are acceptable. The net present value (NPV) is the only capital budgeting technique that allows you to determine which independent projects are acceptable. The net present value (NPV) technique provides an indication of the dollar benefit (on a present value basis) to the firm's shareholders of purchasing a capital budgeting project. A project's internal rate of return...
All of the following statements about the QBI deduction are correct EXCEPT: The QBI deduction will...
All of the following statements about the QBI deduction are correct EXCEPT: The QBI deduction will not reduce AGI. The QBI deduction will allow pass-through entities to pay the same tax rate as C corporations. The QBI deduction will not reduce self-employment tax. The QBI deduction will reduce the amount of income subject to tax.
Which of the following statements is correct? C The payback period is the length of time...
Which of the following statements is correct? C The payback period is the length of time it takes for an investment to recoup its A) own initial cost out of the cash receipts it generates. O B Projects with shorter payback periods are always more profitable than projects with longer payback periods. C The payback method of making capital budgeting decisions gives ful c) consideration to the time value of money. O If new equipment is replacing old equipment, any...
Which of the following statements is CORRECT? The internal rate of return method (IRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects. The discounted payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects. The payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects. The net present value method (NPV) is generally regarded by academics...
29. Which of the following is INCORRECT about the annual rate of return method of evaluating Capital project? The calculation is simple . The accounting term used are familiar to management The timing of net cash flows is not considered. d. The time value of money is considered ABC Company wishes to undertake the development a major project in the 7th Ward of New Orleans. It is willing to invest $500,000,000.00 over 10 years time. The Company is considering various...
What is the major disadvantage of the internal rate of return method? Select one: a. It can produce more than one internal rate of return. O b. It ignores the expected service life. c. It discriminates against long-term projects. O d. It complicates the comparison of projects of the different sizes. o e. It ignores the time value of money.
Which of the following statements is correct? C The payback period is the length of time it takes for an investment to recoup its A) own initial cost out of the cash receipts it generates. O B Projects with shorter payback periods are always more profitable than projects with longer payback periods. C The payback method of making capital budgeting decisions gives ful c) consideration to the time value of money. O If new equipment is replacing old equipment, any...
Most questions answered within 3 hours.
-
Write the ionic equations for the first stage of salts
hydrolysis.
Anion, Cation?
Na2S
NiSO4
K2SO4...
asked 45 minutes ago -
suppose there is a normally distributed population with a mean of
250 and a standard deviation...
asked 1 hour ago -
Question Three
Suppose you as project manager are using the Waterfall
development methodology on a large...
asked 2 hours ago -
Which statement is not true about welfare in Canada?
A.Benefits typically vary based on one's ability...
asked 2 hours ago -
Please help me with FLOWCHART and UML diagram for class,
thank you!
#include <iostream>
#include <fstream>...
asked 3 hours ago -
3. Describe the “logic circuit” of the Lac operon. Which
proteins are bound or not to...
asked 3 hours ago -
Ayesha’s adjusted gross income is $60,000 in 2019. She donated a
piece of artwork with a...
asked 3 hours ago -
For Dijkstra’s shortest path algorithm:
a. Give the Big-O time for Dijkstra’s shortest path algorithm
and...
asked 4 hours ago -
Phosphorus violates the 'octet rule' in biological molecules,
forming more covalent bonds than expected based on...
asked 4 hours ago -
A 1.3 eV electron has a 10-4 probability of tunneling
through a 2.4 eV potential barrier....
asked 4 hours ago -
What is the one ingredient that is common to being successful
with all stakeholders?
profit
trust...
asked 4 hours ago -
Write an assembly language 32 bit program that reads in lines of
text by a .txt...
asked 4 hours ago