The decision technique that measures the estimated performance of a capital investment by dividing the project's annual after-tax income by the average investment cost is called the:

Question

Quizplus · Accepted Answer

The technique described is the accounting (book) rate of return on the investment, which measures the project's estimated performance by dividing the annual after-tax income by the average investment cost. This calculation provides an estimate of the percentage return on the investment, which can be compared to the company's required rate of return to determine if the project is a good investment. The other answer choices describe different decision techniques or models, but they do not match the description given in the question.

The Decision Technique That Measures the Estimated Performance of a Capital