If Only One Capital Budgeting Technique Could Be Used to Evaluate

question 33

Multiple Choice

If only one capital budgeting technique could be used to evaluate a project,which of the following would be the most preferred?

• A) Payback
• B) IRR
• C) MIRR
• D) Profitability index
• E) NPV

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Definitions:

Preferred Dividends

Preferred dividends are payments made to preferred shareholders before any dividends are distributed to common shareholders.

Return On Common Stockholders' Equity

A financial ratio that measures the amount of net income returned as a percentage of shareholders equity, indicating the profitability from the shareholders' perspective.

Debt To Assets Ratio

Measures the percentage of assets provided by creditors; computed by dividing total liabilities by total assets.

Total Assets

The combined value of everything a company owns, including cash, property, equipment, and inventory.