The Accounting Rate-Of-Return Method Is Widely Used to Measure the Estimated

question 60

True/False

The accounting rate-of-return method is widely used to measure the estimated performance of a capital investment,primarily because it uses time value of money concepts.

---

Definitions:

Maturity

The date on which a financial obligation or investment becomes due for payment or is to be repaid in full.

Coupon Rate

The yield paid by a fixed-income security; a fixed percentage of the par value of the bond, paid to the investor annually or semi-annually.

Par Value

The face value of a bond or stock as stated by the issuer, which may differ from its market value.

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis, reflecting the risk and time value of money.