Without Using Formulas, Provide a Definition of Average Accounting Return

question 391

Multiple Choice

Without using formulas, provide a definition of average accounting return (AAR) .

• A) A project analysis tool that measures the acceptability of a project by determining the amount of profit that can be expected based on an investment made.
• B) A project analysis tool that measures the acceptability of a project through the difference between a project's initial investment and whether the present value of its cash flow will repay the investment.
• C) A project analysis tool that measures the acceptability of a project by determining the length of time required for an investment's discounted cash flows to equal its initial cost.
• D) A project analysis tool that determines the amount of time required for an investment to generate cash flows to recover its initial cost.
• E) A ranking method used to assess projects. PI greater than 1 signify positive NPV projects, while PI less than 1 signify negative NPV projects.

Identify and understand agency costs and their effects on the firm's operations and governance.

Understand the different types of business organizations and their suitability for raising capital.

Recognize the impact of an owner’s death on the dissolution of business types.

Identify the roles and responsibilities of key corporate officers such as the Treasurer and Controller.