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