The Method of Analyzing Capital Investment Proposals That Divides the Estimated

question 167

Multiple Choice

The method of analyzing capital investment proposals that divides the estimated average annual income by the average investment is:

• A) cash payback method
• B) net present value method
• C) internal rate of return method
• D) average rate of return method

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Definitions:

Account

A record that summarizes all transactions related to a particular item or entity, used in financial accounting to track financial changes.

Dividends

Payments made by a corporation to its shareholders out of its profits.

Expenses

Costs incurred in the operation of a business to generate revenue.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company’s balance sheet.