The Accounting Rate of Return Method and the Payback Method

question 117

True/False

The accounting rate of return method and the payback method are often used as preliminary screening measures, but are insufficient to fully evaluate a capital investment.

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Definitions:

Dividend Growth Rate

The annual percentage rate at which the dividends paid by a stock or company increase.

Annual Dividends

The total amount of dividends that a company pays to its shareholders on an annual basis, typically expressed per share.

Past Five Years

The phrase typically refers to the most recent five-year period up to the current date, often used in analyses or comparisons over time.

Debt-equity Ratio

An indicator measuring the relative funding of a company's assets from debt versus shareholders' equity.