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Why Might the Accounting Rate of Return Be Low in the Initial

Question 87

Multiple Choice

Why might the accounting rate of return be low in the initial years of an investment?


A) Because the depreciation tax shield is negative
B) Because customers are not willing to spend money in the initial years
C) Because the investment base will be higher in the initial years
D) Because the company must pay for the investment at the beginning of the first year

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