Match each definition that follows with the term (a-f) it defines.
-A measure of the average income as a percent of the average investment

Question

Quizplus · Accepted Answer

The accounting rate of return measures the average income (also known as net income or profit) as a percentage of the average investment.

Answer: D
 The internal rate of return method is a measure of investment profitability which calculates the discount rate at which the present value of the expected cash flows from the investment equals the initial investment.

Answer: E
 The payback period is the amount of time it takes for an investment to generate enough cash flows to recover the initial investment.

The other choices are not correct definitions of the terms. 
Capital rationing refers to the limit placed on the amount of capital available for investment. 
An annuity is a series of equal payments or receipts over a specified period of time. 
Capital investment analysis is the process of evaluating potential investment opportunities.

Match Each Definition That Follows with the Term (A-F) It