An Investment Has an Initial Cost of $2

question 70

Multiple Choice

An investment has an initial cost of $2.7 million and net income of $189,400, $178,600, and $172,500 for Years 1 to 3.This investment will be depreciated by $900,000 a year over the three-year life of the project.Should this project be accepted based on the average accounting rate of return if the required rate is 12.5 percent? Why or why not?

• A)Yes, because the AAR is 12.5 percent
• B)Yes, because the AAR is less than 12.5 percent
• C)Yes, because the AAR is greater than 12.5 percent
• D)No, because the AAR is greater than 12.5 percent
• E)No, because the AAR is less than 12.5 percent

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Definitions:

1940s-1960s

A period marked by significant global events including World War II, the Cold War, and social and cultural shifts in many societies, including the Civil Rights Movement in the United States.

Charismatic Leadership

A leadership style where leaders inspire, enthuse, and energize their followers through personal magnetism and appeal, often leading to high levels of loyalty and motivation.

Transformational Leadership

The active promotion of values to provide a shared vision of the organization. Leader and members are bound together in a higher moral purpose. The leader raises the aspirations of followers such that they think and act beyond their own self-interests.

Lewin's Styles

Kurt Lewin's leadership styles framework, which identifies three main styles of leadership: autocratic, democratic, and laissez-faire.