Survey of Accounting - With CengageNOW 1Term
8th Edition
ISBN: 9781337379823
Author: WARREN
Publisher: Cengage
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Question
Chapter 15, Problem 1SEQ
To determine
Concept Introduction:
ARR:
Accounting
The formula to calculate ARR is as follows:
Payback Period:
Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual
To choose:
The method of evaluation of capital investment proposals that ignore present value
Expert Solution & Answer
Answer to Problem 1SEQ
C. Both A and B
Explanation of Solution
Explanation for correct answer:
Both the Average rate of return and Cash Payback methods ignore present value for evaluation of capital investment proposals. Hence the correct option is C.
Explanation for incorrect answers:
A. Both the Average rate of return and Cash Payback methods ignore present value for evaluation of capital investment proposals. Hence this option is incorrect.
B. Both the Average rate of return and Cash Payback methods ignore present value for evaluation of capital investment proposals. Hence this option is incorrect.
D. Both the Average rate of return and Cash Payback methods ignore present value for evaluation of capital investment proposals. Hence this option is incorrect.
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Chapter 15 Solutions
Survey of Accounting - With CengageNOW 1Term
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