tells us the amount by which the value of a firm will change if a project is accepted. Multiple Choice Net present value Discounted payback Internal rate of return Profitability index Payback Payback The advantages of using average accounting return include its Multiple Choice use of easily obtained information inclusion of time value of money considerations o use of a cutoff rate as a benchmark o use of pretax income in its computation o o use of real, versus nominal, average income The advantages of the payback method of project analysis include: Multiple Choice considers time value of money, liquidity bias liquidity bias, arbitrary cutoff point O o liquidity bias, ease of use liquidity bias, ease of use o ignores time value of money, ease of use o ease of use, arbitrary cutoff point o Pick the correct statement related to independent projects with conventional cash flows. Online Fa19 WklyEx07 for Chapter Nine (Part 1) Multiple Choice The internal rate of return decision may contradict the net present value decision. Business practice dictates that independent projects should have three distinct accept indicators before a project is actually implemented. The payback decision rule could override the net present value decision rule should cash availability be limited. The profitability index rule cannot be applied in this situation. The projects cannot be accepted unless the average accounting return decision ruling is positive. The are the two methods of project analysis that most biased towards short-term projects. Multiple Choice net present value and internal rate of return O internal rate of return and profitability index payback and discounted payback net present value and discounted payback discounted payback and profitability index