Asked by Surprise Bahati Mutunwa on Jul 14, 2024
Verified
Which methods of evaluating a capital investment project use cash flows as a measurement basis?
A) Net present value,accounting rate of return,and internal rate of return.
B) Internal rate of return,payback period,and accounting rate of return.
C) Accounting rate of return,net present value,and payback period.
D) Payback period,internal rate of return,and net present value.
E) Net present value,payback period,accounting rate of return,and internal rate of return.
Capital Investment Project
A project requiring significant amounts of capital for the purchase, improvement, or maintenance of long-term assets to generate future benefits.
Cash Flows
The sum total of currency transactions inbound and outbound in a firm, markedly affecting its cash-on-hand.
- Ascertain different approaches to capital budgeting assessment and their applications.
Verified Answer
AB
Aleseng BoitumeloJul 19, 2024
Final Answer :
D
Explanation :
Net present value (NPV), internal rate of return (IRR), and payback period methods all use cash flows as the basis for evaluating capital investment projects. The accounting rate of return (ARR) method, on the other hand, is based on accounting income and not cash flows.
Learning Objectives
- Ascertain different approaches to capital budgeting assessment and their applications.
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