Average accounting return method of project analysis

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Reference no: EM131545198

1. The weighted average cost of capital for a firm is also dependent upon the firm's:

I. depreciation rate.

II. liquidity ratio.

III. tax rate.

IV. price earning ratio.

V. interest payment.

II and IV only

I, II, and IV only

I and III only

III and V only

I, III, and IV only

2. Which of the following will decrease the net present value of a project?

I. increasing the value of each of the project's discounted cash inflows

II. moving each of the cash inflows forward to a sooner time period

III. decreasing the required discount rate

IV. decreasing the project's initial cost at time zero

V. decreasing the amount of the final cash inflow

III, IV and V only

I, II, III and IV only

II and V only

V only

I only

3. Which of the following is/are true for the average accounting return method of project analysis?

I. no time value of money considerations

II. does not needof a cutoff rate

III. easily obtainable information for computation

IV. based on cash flow and book value of asset

I, II, and IV only

I and III only

I only

I, II, III, and IV

III and IV only

Reference no: EM131545198

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