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:

Business

An organization or entity engaged in commercial, industrial, or professional activities with the aim to generate profits.

Board of Directors

A group of elected or appointed members who collectively oversee the activities of a company or organization, ensuring it's managed in the best interest of the stakeholders.

Stockholders

Individuals or entities that own shares in a corporation, giving them rights to dividends and a say in company affairs.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership interest.