Which of the following is considered to be a redeeming feature of average accounting return analysis?
A) It incorporates time value of money.
B) Estimation of the appropriate cutoff rate is straightforward and easy.
C) Calculation relies on net income and not cash ﬂows or asset values.
D) Calculation relies on book values and not market values or cash ﬂows.
E) It is relatively easy to calculate.

Question

Quizplus · Accepted Answer

The redeeming feature of average accounting return analysis is that it is relatively easy to calculate. However, this method has many limitations, such as it relies on net income and book values and not cash flows or market values. Additionally, it does not incorporate the time value of money, and the estimation of the appropriate cutoff rate is not straightforward and easy.

Which of the Following Is Considered to Be a Redeeming