Average Rate of Return : Average rate of return is a method that measures the average earnings of a particular business, as a percentage of the average investment. It is also known as accounting rate of return. Calculation of Average rate of return: Average Rate of Return } = ( Estimated Average Annual Income ) ( Average Investment ) × 100 The principal objection to use the average rate of return method.

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Answer 1

Question

Chapter 25, Problem 1DQ

To determine

Average Rate of Return:

Average rate of return is a method that measures the average earnings of a particular business, as a percentage of the average investment. It is also known as accounting rate of return.

Calculation of Average rate of return:

$Average Rate of Return } = (Estimated Average Annual Income)(Average Investment)× 100$

The principal objection to use the average rate of return method.

Expert Solution & Answer

Explanation of Solution

The major objection for using the average rate of return method is as follows:

1. Average rate of return method doesn’t consider the expected cash flows from the investment proposals.

2. It also doesn’t consider the period (timing) of the expected cash flows.

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Kay works in an insurance office and in 2013 was provided with uniforms by her employer which cost $15,000. Which of the following tax treat of the uniform allowance is incorrect? A.Any amount exceeding $5739 is taxable at a rate of 25% B.She cannot claim uniform and laundry allowance C.The amount is added to her salary and taxed at 25% D.If the company provided uniform allowance, then it would regarded as a taxable benefit

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Steven works in an insurance office and in 2013 was provided with uniforms by her employer which cost $15,000. Which of the following tax treat of the uniform allowance is incorrect? A. Any amount exceeding $5739 is taxable at a rate of 25% B. She cannot claim uniform and laundry allowance C.The amount is added to her salary and taxed at 25% D. If the company provided uniform allowance, then it would regarded as a taxable benefit

Answer 2

Question

Chapter 25, Problem 1DQ

To determine

Average Rate of Return:

Average rate of return is a method that measures the average earnings of a particular business, as a percentage of the average investment. It is also known as accounting rate of return.

Calculation of Average rate of return:

$Average Rate of Return } = (Estimated Average Annual Income)(Average Investment)× 100$

The principal objection to use the average rate of return method.

Expert Solution & Answer

Explanation of Solution

The major objection for using the average rate of return method is as follows:

1. Average rate of return method doesn’t consider the expected cash flows from the investment proposals.

2. It also doesn’t consider the period (timing) of the expected cash flows.

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Answer 3

Question

Chapter 25, Problem 1DQ

To determine

Average Rate of Return:

Average rate of return is a method that measures the average earnings of a particular business, as a percentage of the average investment. It is also known as accounting rate of return.

Calculation of Average rate of return:

$Average Rate of Return } = (Estimated Average Annual Income)(Average Investment)× 100$

The principal objection to use the average rate of return method.

Expert Solution & Answer

Explanation of Solution

The major objection for using the average rate of return method is as follows:

1. Average rate of return method doesn’t consider the expected cash flows from the investment proposals.

2. It also doesn’t consider the period (timing) of the expected cash flows.

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Answer 4

Question

Chapter 25, Problem 1DQ

To determine

Average Rate of Return:

Average rate of return is a method that measures the average earnings of a particular business, as a percentage of the average investment. It is also known as accounting rate of return.

Calculation of Average rate of return:

$Average Rate of Return } = (Estimated Average Annual Income)(Average Investment)× 100$

The principal objection to use the average rate of return method.

Expert Solution & Answer

Explanation of Solution

The major objection for using the average rate of return method is as follows:

1. Average rate of return method doesn’t consider the expected cash flows from the investment proposals.

2. It also doesn’t consider the period (timing) of the expected cash flows.

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Answer 5

Chapter 25, Problem 1DQ

To determine

Average Rate of Return:

Average rate of return is a method that measures the average earnings of a particular business, as a percentage of the average investment. It is also known as accounting rate of return.

Calculation of Average rate of return:

$Average Rate of Return } = (Estimated Average Annual Income)(Average Investment)× 100$

The principal objection to use the average rate of return method.

Expert Solution & Answer

Explanation of Solution

The major objection for using the average rate of return method is as follows:

1. Average rate of return method doesn’t consider the expected cash flows from the investment proposals.

2. It also doesn’t consider the period (timing) of the expected cash flows.

Answer 6

Chapter 25, Problem 1DQ

To determine

Average Rate of Return:

Average rate of return is a method that measures the average earnings of a particular business, as a percentage of the average investment. It is also known as accounting rate of return.

Calculation of Average rate of return:

$Average Rate of Return } = (Estimated Average Annual Income)(Average Investment)× 100$

The principal objection to use the average rate of return method.

Expert Solution & Answer

Explanation of Solution

The major objection for using the average rate of return method is as follows:

1. Average rate of return method doesn’t consider the expected cash flows from the investment proposals.

2. It also doesn’t consider the period (timing) of the expected cash flows.

Answer 7

Chapter 25, Problem 1DQ

To determine

Average Rate of Return:

Average rate of return is a method that measures the average earnings of a particular business, as a percentage of the average investment. It is also known as accounting rate of return.

Calculation of Average rate of return:

$Average Rate of Return } = (Estimated Average Annual Income)(Average Investment)× 100$

The principal objection to use the average rate of return method.

Answer 8

Expert Solution & Answer

Explanation of Solution

The major objection for using the average rate of return method is as follows:

1. Average rate of return method doesn’t consider the expected cash flows from the investment proposals.

2. It also doesn’t consider the period (timing) of the expected cash flows.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 25 - Prob. 1DQ Ch. 25 - Discuss the principal limitations of the cash...Ch. 25 - Prob. 3DQ Ch. 25 - Prob. 4DQ Ch. 25 - Prob. 5DQ Ch. 25 - Prob. 6DQ Ch. 25 - Prob. 7DQ Ch. 25 - Two projects have an identical net present value...Ch. 25 - Prob. 9DQ Ch. 25 - Prob. 10DQ

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Explanation of Solution

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Chapter 25 Solutions