Which of the Following Is Not a "Con" of the Accounting

question 7

Multiple Choice

Which of the following is not a "con" of the Accounting Rate of Return method?

• A) The method makes no adjustment for the time value of money or project risk.
• B) The depreciation method used impacts both the numerator and denominator.
• C) It focuses on net income rather than a company's ability to generate cash.
• D) The choice of the hurdle rate is arbitrary.
• E) All of the above are cons of the Accounting Rate of Return method.

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Definitions:

Sherman Act

A foundational antitrust law passed in 1890 in the United States, aimed at prohibiting monopolies and promoting competition.

Federal Trade Commission Act

A United States federal law established in 1914 to prevent unfair competition, deceptive acts, and regulate antitrust practices.

Robinson-Patman Act

A United States federal law that prohibits anti-competitive practices by producers, specifically price discrimination.

Standard Markup Pricing

A pricing method that involves adding a fixed percentage to the cost of goods to determine their selling price.