A Company Is Evaluating 3 Possible Investments

question 22

Multiple Choice

A company is evaluating 3 possible investments. Each uses straight-line depreciation. See data below: What is the rate of return for Project B?

• A)50%
• B)4%
• C)18%
• D)10%

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Definitions:

Activity Base

A measure used as a basis for allocating costs in activity-based costing; often related to the volume of activities driving costs.

Costs

Costs represent the monetary value spent on goods, services, and efforts to achieve an objective, such as producing a product or providing a service.

Service Firms

Companies that provide intangible products or services to consumers or other businesses.

Activity Bases

Activity Bases refer to the measures used in activity-based costing for allocating fixed costs to products or services based on the activities that drive these costs.