Asked by Zeina Samarneh on May 29, 2024
Verified
The method of analyzing capital investment proposals that divides the estimated average annual income by the average investment is the
A) cash payback method
B) net present value method
C) internal rate of return method
D) average rate of return method
Average Rate of Return
A method of assessing the profitability of an investment by dividing the average annual profit by the initial investment cost.
Average Investment
A calculation to assess the average amount of investment over a certain period, often used in evaluating the efficiency or profitability of an investment.
- Acquire insight into the essential notions and merits of diverse capital investment evaluation methodologies.
- Ascertain and understand the median return rate for an investment.
Verified Answer
AK
Anastacia KuzminaJun 01, 2024
Final Answer :
D
Explanation :
The method described is the average rate of return method, which calculates the percentage return on investment based on the estimated average annual income divided by the average investment.
Learning Objectives
- Acquire insight into the essential notions and merits of diverse capital investment evaluation methodologies.
- Ascertain and understand the median return rate for an investment.
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