The Accounting Rate of Return Differs from Other Methods of Capital

question 124

Multiple Choice

The accounting rate of return differs from other methods of capital budgeting in that it

• A)does not focus on cash flows.
• B)uses an inflated discount rate.
• C)ignores the time value of money.
• D)None of these answer choices are correct.

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Definitions:

Proportions

A statistical measure that describes the size of a part in relation to the whole, often expressed as a fraction or percentage.

Chi-squared Goodness-of-fit Test

A statistical test used to determine whether sample data fits a population with a specified distribution.

Test Statistic

A value calculated from sample data during a hypothesis test. It is used to determine whether to reject the null hypothesis.

Chi-squared

A statistical test used to determine if there is a significant difference between observed frequencies and expected frequencies in categorized variables.