If a Company's Required Rate of Return Is 9%, and in Using

question 121

Multiple Choice

If a company's required rate of return is 9%, and in using the profitability index method, a project's index is greater than 1, this indicates that the project's rate of return is

• A) equal to 9%.
• B) greater than 9%.
• C) less than 9%.
• D) unacceptable for investment purposes.

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Definitions:

Perpetual Inventory System

An accounting method where goods are recorded as sold immediately through the use of computer systems, providing a continuous record of inventory.

Gross Price Method

An accounting practice where inventory and purchases are recorded at their full cost without deducting trade discounts.

Catalog Price

The listed price of items for sale as published in a catalog, not accounting for any discounts or promotions that might apply.

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including repayment timeline, interest rate, and any other charges.