1. Which one of the following correctly defines the average accounting return?

a. average cash inflow divided by average book value

b. average book value divided by average cash inflow

c. average book value divided by average discounted cash flow

d. average book value divided by average net income

2. The president of a firm is most concerned with creating value for the firms shareholders. Given this concern, the best method he or she should use to evaluate all proposed projects is:

a. the accounting rate of return.

b. payback.

c. net present value.

d. profitability index.

multiple choice