When Two or More Capital Investment Proposals Are Being Evaluated

question 17

True/False

When two or more capital investment proposals are being evaluated using the accounting rate-of-return method, the proposal that yields the highest ratio of net income to average cost of investment is selected.

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Definitions:

Unemployment

The situation when individuals who are capable of working and are actively seeking employment are unable to find a job.

Production Possibilities Curve

A curve depicting all maximum output possibilities for two goods, given a set of inputs and technology.

Unemployment Rate

The fraction of the labor market actively in pursuit of work but is currently jobless.

Opportunity Cost

The expense associated with giving up the second-best choice in favor of opting for the preferred alternative in any decision-making process.