The Accounting Rate of Return Is Computed As

question 39

Multiple Choice

The accounting rate of return is computed as:

• A)Average annual income from the project divided by average annual investment.
• B)Average annual income from the project divided by the length of time it takes to recoup the initial investment.
• C)Average annual investment divided by the average annual income from the project.
• D)Average annual investment divided by the length of time it takes to recoup the initial investment.
• E)The initial cash outlay divided by the average annual income from the project.

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Definitions:

Autarky Price

The price of a good or service in a closed economy with no international trade, set by the balance of domestic supply and demand.

World Price

The international market price of a good or service, influenced by global supply and demand conditions.

Domestic Quantity

The total amount of a goods or services produced and consumed within a country's borders.

Trade

The exchange of goods, services, or both between parties, usually on the basis of comparative advantage.