Which of the Following Is Used as the Equation's Numerator

question 127

Multiple Choice

Which of the following is used as the equation's numerator when computing the accounting rate of return for a capital asset?

• A)Average amount invested in the asset
• B)Average annual operating income from the asset
• C)Total amount invested in the asset
• D)Average net cash flows from the asset

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Definitions:

Taxes Fall

A scenario in which the burden of taxes decreases, either through reduced rates or changes in policy that lead to lower tax obligations.

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the market price per share by the earnings per share, used to assess a company's relative valuation.

Retained Earnings

Profits that a company keeps after dividends are paid, which are often reinvested into the business for growth or debt repayment.

Closed Economy

An economic model that remains isolated from global trade and international financial exchanges.