What Is the Payback and Average Accounting Rate of Return

question 13

Multiple Choice

What is the payback and average accounting rate of return of the following project?

• A) Payback: 4 years, ARR 40%
• B) Payback: 3 years, ARR 40%
• C) Payback: 4 years, ARR 35%
• D) Payback: 4 years, ARR 100%

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Definitions:

Consumer Goods

Products and commodities purchased by individuals for personal or household use.

Farm Products

Goods involved in farming operations, including crops, livestock, and products obtained from crops or animals (like milk or wool).

Financing Statement

A document filed to give public notice to third parties of a secured party's interest in the property of a debtor, typically used in securing transactions under the UCC.

Purchase-Money Security Interest

An interest in the property that secures payment or performance of an obligation where the property is purchased, giving the creditor rights in the purchased property.