Which Capital Investment Evaluation Technique Is Described by the Following

question 149

Multiple Choice

Which capital investment evaluation technique is described by the following characteristics? (1) Easy to understand and communicate; (2) May result in multiple answers; (3) May lead to incorrect decisions when applied to mutually exclusive investments.

• A) NPV.
• B) IRR.
• C) AAR.
• D) Payback period.
• E) Discounted payback.

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Definitions:

Profit Center

A segment or part of a business directly responsible for its profits and losses.

Toy Department

A specialized retail section dedicated to selling toys and games.

Profit Center

A branch or division of a company that is accounted for on a standalone basis for profit calculation.

Cost Center

A segment of a company that does not directly generate revenue but incurs costs, focusing on controlling expenses and efficiency.