Which of the following are considered weaknesses in the average accounting return method of project analysis?
I.exclusion of time value of money considerations
II.need of a cutoff rate
III.easily obtainable information for computation
IV.based on accounting values
A)I only
B)I and IV only
C)II and III only
D)I, II, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

The average accounting return method does not consider the time value of money, requires a cutoff rate which can be arbitrary, and is based on accounting values rather than cash flows, making I, II, and IV weaknesses.

Which of the Following Are Considered Weaknesses in the Average