Question
Q1: Which of the following is not claimed as an advantage of the accounting rate of return (ARR)? a. .It facilitates ranking of projects of
Q1: Which of the following is not claimed as an advantage of the accounting rate of return (ARR)?
a. .It facilitates ranking of projects of different sizes.
b. Accounting profit is a number familiar to most managers.
c. It is consistent with widely used measures of profitability.
Q2: A machine costs $100,000 and is expected to last four years, with a residual value of $10,000, Straight-line depreciation is used. The machine will earn a profit of $120,000 (before depreciation) over its life, equally each year. What is the machine's ARR? Round your percentage to the nearest integer.
A.55%
B.15%
C.14%
D.27%
Which of the following is NOT considered a weakness of the ARR method of evaluating investments?
a.The use of accounting profit
b.The use of average investment figures
c.Ease of calculation
d.The relative sizes of competing investments
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