Which of the following is not a characteristic or benefit of the accounting rate of return approach to analyzing a potential capital investment?

It uses the time value of money

It includes the amount of income earned over the entire life of the investment.

It uses the accrual accounting figures while the other methods analyze cash flows.

It allows the user to see the affect the investment will have upon operating income.

An analysis of a proposal by the net present value method indicated that the present value of future cash inflows is greater than the amount that would be invested. Which of the following statements best describes the results of this analysis?

The project is desirable. The rate of return expected from the investment exceeds the minimum rate used to analyze the project.

The project is desirable. The rate of return expected from the investment is less the minimum rate used to analyze the project.

The project is not desirable. The rate of return expected from the investment exceeds the minimum rate to analyze the project.

The project is not desirable. It will take too many years to for the company to recoup its investment.