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Which of the Following Is a Reason Managers Use the Accounting

Question 28

Multiple Choice

Which of the following is a reason managers use the accounting rate of return to evaluate potential investment projects?


A) because debt contracts require that a firm maintain certain ratios that are not affected by income and long-term asset levels
B) because it serves as a screening measure to ensure that new investments do affect key financial ratios
C) because bonuses to managers may be based on accounting income and/or return on assets
D) because it does not consider the time value of money

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