The return generated by an investment based on its operating income is the
A)internal rate of return.
B)discounted rate of return.
C)accounting rate of return.
D)payback period.

Question

Quizplus · Accepted Answer

The return generated by an investment based on its operating income is called the accounting rate of return. A is incorrect because internal rate of return is a different calculation which takes into account the time value of money. B is incorrect because discounted rate of return also takes into account the time value of money and is used to calculate the present value of future cash flows. D is incorrect because payback period is the length of time it takes to recover the initial investment, and does not consider operating income.

The Return Generated by an Investment Based on Its Operating