Which of the Following Decision Rules Is Best for Evaluating

question 14

Multiple Choice

Which of the following decision rules is best for evaluating projects for which cash flows beyond a specified point in time, and the time value of money, can both be ignored?

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

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Definitions:

Domestic Price

The price of goods and services within a country's borders as opposed to international or world prices.

Comparative Advantage

An economic term that refers to an economy's ability to produce goods and services at a lower opportunity cost than that of trade partners.

International Trade

The exchange of goods, services, and capital between countries, driven by comparative advantage and leading to increased economic efficiency.

Corn

A cereal plant or its grain as a staple food, widely cultivated in various parts of the world, also used as feed for livestock.