Which of the Following Is the Difference Between the Net

question 38

Multiple Choice

Which of the following is the difference between the net present value (NPV) method and the internal rate of return (IRR) method of capital budgeting?

• A)NPV assumes that each cash inflow received is reinvested at the required rate of return, whereas the IRR assumes that each cash inflow is reinvested at the computed IRR.
• B)IRR is used for choosing among mutually exclusive projects, and NPV is not used for this purpose.
• C)NPV considers the time value of money and IRR does not.
• D)NPV measures profitability in relative terms, whereas IRR measures profitability in absolute terms.

Comprehend the importance and components of a compensation budget.

Recognize the importance of evaluating employee attitudes towards new compensation systems.

Evaluate the effectiveness of compensation systems through various metrics.

Understand the advantages and disadvantages of outsourcing HR functions, including compensation.

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Definitions:

Call Premium

The extra amount above the par value that a bond issuer must pay to redeem a bond before its maturity date.

Net Profit

The actual profit after working expenses not included in the calculation of gross profit have been paid.

Exercise Price

The price at which the holder of an options contract can buy (call option) or sell (put option) the underlying asset.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.