A project's average net income divided by its average book value is referred to as the project's average:
A) net present value.
B) internal rate of return.
C) accounting return.
D) profitability index.
E) payback period.

Question

A project's average net income divided by its average book value is referred to as the project's average: 
A) net present value. 
B) internal rate of return. 
C) accounting return. 
D) profitability index. 
E) payback period.

Quizplus · Accepted Answer

The project's average net income divided by its average book value gives us the accounting return, which is a profitability measure. Therefore, the correct choice is C, accounting return. The other options refer to other profitability measures, such as net present value, internal rate of return, profitability index, and payback period, which are calculated differently.

A Project's Average Net Income Divided by Its Average Book