Which of the Following Is a Technique for Evaluating Capital

question 63

Multiple Choice

Which of the following is a technique for evaluating capital projects that tells how long it will take a firm to earn back the money invested in a project?

• A) Payback
• B) Internal rate of return
• C) Net present value
• D) Profitability index

---

Definitions:

Marginal Tax Rate

The rate at which the next dollar of taxable income is taxed.

Proportional Tax

A tax system where the rate of taxation is fixed, meaning the tax rate stays the same regardless of the taxable amount or income.

Average Tax Rate

The portion of total income that is paid as tax, calculated by dividing the total tax amount by the taxable income.

Tax Base

The total amount of assets or revenue that a government can tax to fund its operations and services.