In actual practice, managers frequently use the: I. average accounting return me

ID: 2732075 • Letter: I

Question

In actual practice, managers frequently use the:

I. average accounting return method because the information is so readily available

II. internal rate of return because the results are easy to communicate and understand

III. discounted payback because of its simplicity

IV. net present value because it is considered by many to be the best method of analysis

I and III only

II and III only

I, II, and IV only

II, III, and IV only

I, II, III, and IV

I and III only

II and III only

I, II, and IV only

II, III, and IV only

I, II, III, and IV

Frequently managers use ARR method, IRR method and NPV method in the process of capital budgeting.

The reason of using these 3 methods is that these use the concept of time value of money and are easy to understand.

The ARR method information is readily available.

The IRR method is easy to understand.

Also, many companies use the NPV technique.

Therefore, the correct options are 1, 2 and 4.

Hence, the correct option is C.

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