The primary advantages of the average rate of return method are its ease of computation and the fact that a. rankings of proposals are necessary b. it is especially useful to managers whose primary concern is liquidity c. there is less possibility of loss from changes in economic conditions and obsolescence when the commitment is short term d. it emphasizes the amount of income earned over the life of the proposal

Question

Business

Dakota Schmidt

9 March, 07:01

The primary advantages of the average rate of return method are its ease of computation and the fact that a. rankings of proposals are necessary b. it is especially useful to managers whose primary concern is liquidity c. there is less possibility of loss from changes in economic conditions and obsolescence when the commitment is short term d. it emphasizes the amount of income earned over the life of the proposal

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Jazlyn Cardenas · Answer 1

Answer: it emphasizes the amount of income earned over the life of the proposal (D)

Explanation:

The average rate of return is the average yearly amount of cash flow that is generated over the life of an investment. The average rate of return rate is calculated by adding all expected cash flows and then dividing by the number of years which the investment is projected to last for.

The average rate of return allows for a easy comparison between several types of investments. The average rate of return is also easy to compute as it takes note of the amount of income that is earned over the life of the proposal.