Which of the Following Does Not Represent an Advantage of the Unadjusted

question 134

Multiple Choice

Which of the following does not represent an advantage of the unadjusted rate of return over the payback method for evaluating capital projects?

• A) The unadjusted rate of return method considers the investment's profitability.
• B) The unadjusted rate of return method considers the time value of money.
• C) The unadjusted rate of return is a percentage that can be compared to a stated hurdle rate.
• D) None of these represents an advantage.

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Definitions:

Sales

The activities involved in selling products or services in return for money or other compensation.

Residual Income

The amount of income that an entity has after all personal debts and expenses have been paid, often used in personal finance, or an approach to measure a department's or investment's profitability after charging cost of capital.

Invested Capital

The cumulative sum of funds invested by stockholders and creditors into a firm for long-term purposes.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, usually expressed as a percentage of the principal.