Asked by Miftahul Khaira on Jul 08, 2024
Verified
The _____ method of analyzing capital investment proposals divides the estimated average annual income by the average investment.
A) cash payback
B) net present value
C) internal rate of return
D) average rate of return
Average Rate of Return
Calculates the average annual return on an investment over its lifetime, taking into account both the capital gains and any income received from the investment.
Estimated Average Annual Income
An approximation of the amount of money one is expected to earn on average each year, considering various income sources over a specified period.
Average Investment
The mean value of all investments held over a specific period, used to assess overall investment performance.
- Perform calculations and provide interpretation for the expected average rate of financial return on investments.
- Distinguish among different techniques for analyzing capital investments.
Verified Answer
OO
Osahon OgbomoJul 10, 2024
Final Answer :
D
Explanation :
The average rate of return method involves dividing the estimated average annual income by the average investment to analyze capital investment proposals.
Learning Objectives
- Perform calculations and provide interpretation for the expected average rate of financial return on investments.
- Distinguish among different techniques for analyzing capital investments.