#1
Which of the following is a capital budgeting method?
Payback period
ExplanationDetermines time to recover initial investment.
#2
What is the payback period in capital budgeting?
The time it takes to recover the initial investment
ExplanationDuration to recoup initial outlay.
#3
Which of the following is NOT a capital budgeting method?
Break-even Analysis
ExplanationNot a method for investment evaluation.
#4
Which capital budgeting method considers the time value of money?
Net Present Value (NPV)
ExplanationAccounts for money's changing worth over time.
#5
What does the Internal Rate of Return (IRR) represent in capital budgeting?
The discount rate at which NPV equals zero
ExplanationDiscount rate rendering NPV zero.
#6
What is the discounted payback period?
The time it takes to recover the initial investment considering the time value of money
ExplanationAccounts for time value of money in recovery period.
#7
Which of the following statements about the Profitability Index (PI) is true?
PI greater than 1 indicates a profitable project
ExplanationPI > 1 signifies profitable venture.
#8
Which capital budgeting method is based on the accounting profits of a project?
Accounting Rate of Return (ARR)
ExplanationUtilizes project's accounting profits.
#9
In capital budgeting, what does the profitability index (PI) measure?
The ratio of present value of future cash flows to initial investment
ExplanationIndicates value of future cash flows relative to initial investment.