Why Might the Accounting Rate of Return Be Low in the Initial

question 54

Multiple Choice

Why might the accounting rate of return be low in the initial years of an investment?

• A)Because the depreciation tax shield is negative
• B)Because customers are not willing to spend money in the initial years
• C)Because the investment base will be higher in the initial years
• D)Because the company must pay for the investment at the beginning of the first year

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Definitions:

Hourly Wage

The amount of money paid for each hour of work.

Dual Labor Market Theory

A theory suggesting the labor market is divided into two segments—the primary (high wage, good jobs) and the secondary (low wage, poor quality jobs) sectors.

Productivity Growth

The increase in the efficiency of production, measured by the amount of goods and services produced per unit of input.

Unionized Workers

Employees who are members of a union, which is an organized association formed to protect and further their rights and interests.