Year 2 is worse than the result reported for Year 1 True or False Chapter 13 1.

Question

Year 2 is worse than the result reported for Year 1 True or False Chapter 13 1. If you are typically making at least one "best case and one worst case" computation, then we can generally assume that you are using the: A) unadjusted rate of return method. B) payback period method. C) unadjusted rate of return method and payback period method. D) None of these is correct. 2. When evaluating the use of resources in healthcare organizations, it is important to use: A) an objective process. B) a subjective process. C) both an objective and subjective process. D) None of these is correct 3. The evaluation process can be more manageable if one chosen method is uniformly used to evaluate the: A) return on investment. B) payback period. C) return on investment and the payback period. D) None of these is correct

Explanation / Answer

1) C

Best case computation can be done fruitfully with the help of unadjusted rate of return method (also known as simple rate of return method) where increase in future income is divided by the initial investment of the project.

Worst case computation can be done with the help of payback period method which tells about the time period in which the funds expended will be earned by the investment.

Hence, option C will be the answer.

2) A, Subjective refers to an approach which is driven more by personal perspectives whereas Objective refers to a process more based on hard facts than feelings or opinions.

3) C, while comparing investment options, the workings would become easy and manageable if there is uniformity in calculation of return on investment and payback period of the investments.

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