Question

If the straight-line depreciation method is used, the annual average investment amount used in calculating the accounting rate of return is calculated as (beginning book value + ending book value)/2.
a. True
b. False

Answer 1

Answer:

The answer is true

Explanation:

Accounting Rate of Return is a financial ratio used in capital budgeting decision making. It is the ratio of estimated accounting profit(net income) of a project to the average investment made in the project.

And average investment is calculated as the sum of the beginning and ending book value of the project/investment divided by 2