Question

In the context of the Rate of Return on Original Investment method, what does management do to accept a project?

a.

Accept any project with a positive rate of return

b.

Select and accept the project with the highest rate of return

c.

Accept any project with a rate of return equal to zero

d.

Accept any project with a rate of return equal to the cost of capital

Answer: (b).Select and accept the project with the highest rate of return Explanation:Under the Rate of Return on Original Investment method, management selects and accepts the project with a rate of return equal to the pre-determined cut-off rate of return.

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Q. In the context of the Rate of Return on Original Investment method, what does management do to accept a project?

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