Activity-Based Budgeting Provides Better Planning Because

question 15

Multiple Choice

Activity-based budgeting provides better planning because

• A)it incorporates change by understanding processes and drivers.
• B)it incorporates change by assuming production relationships to be the same.
• C)it incorporates change by making inflationary adjustments.
• D)All of the above are correct.

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Definitions:

Relative Risk

The level of uncertainty or volatility of an investment in comparison to another investment or to a market benchmark.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window; also used in discounted cash flow (DCF) analysis to determine present value.

NPV

A strategy employed in capital budgeting, Net Present Value is instrumental in determining the financial viability of an investment or project.

Projected Cash Flows

Estimates of the amounts of money a company expects to receive and pay out over a certain period in the future.