Which of the Following Capital Budgeting Methods Focuses on Net

question 32

Multiple Choice

Which of the following capital budgeting methods focuses on net income rather than cash flows?

• A)Payback period
• B)Accounting rate of return
• C)Net present value
• D)Internal rate of return

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Definitions:

Revenue Data

Information regarding the income generated by a business or organization from its operations.

Competitive Price-Taker

A firm or individual that has no control over the market price and must accept the prevailing price set by market supply and demand.

Profit

The financial gain realized when the revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Price-taker Firm

A firm that has no control over the market price and must accept the prevailing market price for its products.