In actual practice, managers may use the: I.AAR because the necessary accounting numbers are readily available.
II)IRR because the results are easy to communicate and understand.
III)payback because of its simplicity.
IV)net present value because it is considered by many to be the best method of analysis.
A)I and III only.
B)II and III only.
C)I, III, and IV only.
D)II, III, and IV only.
E)I, II, III, and IV.

Question

Quizplus · Accepted Answer

Managers may use the Accounting Rate of Return (AAR) due to the availability of accounting numbers, the Internal Rate of Return (IRR) because its results are easy to communicate, the payback method for its simplicity, and the Net Present Value (NPV) method because it is often considered the best method of analysis. Each method has its own advantages in practice, making all the options (I, II, III, and IV) correct.

In Actual Practice, Managers May Use The: I