Asked by Keyara Lewis on May 31, 2024
Verified
The methods of evaluating capital investment proposals can be grouped into two general categories that can be referred to as
(1) average rate of return and
(2) cash payback methods.
Average Rate
A representation of the central or typical value of a set of rates, often calculated to find a mean or median value.
Cash Payback Methods
A technique used to estimate the profitability of an investment by calculating the time needed to recoup the initial investment from the cash flows generated by that investment.
Capital Investment Proposals
Suggestions for strategic investments in long-term assets, projects, or ventures aimed at enhancing a company's growth and profitability.
- Understand the diverse methods employed for capital investment evaluation, separating them into present value and non-present value categories.
Verified Answer
ZK
Zybrea KnightJun 06, 2024
Final Answer :
False
Explanation :
The methods of evaluating capital investment proposals are generally grouped into two categories: (1) non-discounting methods such as the average rate of return and cash payback period, and (2) discounting methods such as the net present value (NPV) and internal rate of return (IRR).
Learning Objectives
- Understand the diverse methods employed for capital investment evaluation, separating them into present value and non-present value categories.