Which of the Following Is the Rate of Return,based on Discounted

question 71

Multiple Choice

Which of the following is the rate of return,based on discounted cash flows,a company can expect to earn by investing in a capital asset?

• A) accounting rate of return
• B) bank interest rate
• C) internal rate of return
• D) return on investment

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Definitions:

Inventories

Quantifiable goods or materials held by a company for the purpose of sale in the ordinary course of business, production, or use in creating goods and services.

Depreciable Asset

An asset that decreases in value over time due to use, wear and tear, or obsolescence and can be written off against income.

Useful Life

The estimated period over which an asset is expected to be usable by an entity, or the number of production or similar units expected to be obtained from the asset by an entity.