A Project's Average Net Income Divided by Its Average Book

question 32

Multiple Choice

A project's average net income divided by its average book value is referred to as the project's average: 

• A) net present value. 
• B) internal rate of return. 
• C) accounting return. 
• D) profitability index. 
• E) payback period. 

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Definitions:

Net Income

The profit of a company after all expenses and taxes have been deducted from total revenue.

Initial Value Method

An accounting method where investments are recorded at their acquisition cost without adjusting for changes in the value or performance of the investment over time.

Consolidation Entry G

An adjusting entry made during the consolidation process to eliminate intra-group transactions and balances in the preparation of consolidated financial statements.

Intra-entity Gross Profit

Refers to the profit generated from transactions within the same company or group, not yet realized from an external party's perspective.