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What is the effect of an increase in the cost of capital on the payback period, profitability index and accounting rate of return? Payback period will increase, Profitability will decrease, and Accounting rate of return will increase. Payback period will not change, Profitability will decrease, and Accounting rate of return will not change. Payback period will not change, Profitability will increase, and Accounting rate of return will decrease. Payback period will decrease, Profitability will increase, and Accounting rate of return will decrease

What is the effect of an increase in the cost of capital on the payback period, profitability index and accounting rate of return? Payback period will increase, Profitability will decrease, and Accounting rate of return will increase. Payback period will not change, Profitability will decrease, and Accounting rate of return will not change. Payback period will not change, Profitability will increase, and Accounting rate of return will decrease. Payback period will decrease, Profitability will increase, and Accounting rate of return will decrease

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What is the effect of an increase in the cost of capital on the payback period, profitability index and accounting rate of return?

Payback period will increase, Profitability will decrease, and Accounting rate of return will increase.

Payback period will not change, Profitability will decrease, and Accounting rate of return will not change.

Payback period will not change, Profitability will increase, and Accounting rate of return will decrease.

Payback period will decrease, Profitability will increase, and Accounting rate of return will decrease.

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