In Capital Rationing,an Initial Screening of Alternative Proposals Is Usually

question 57

Multiple Choice

In capital rationing,an initial screening of alternative proposals is usually performed by establishing minimum standards.Which of the following evaluation methods are often used?

• A) cash payback method and average rate of return method
• B) average rate of return method and net present value method
• C) net present value method and cash payback method
• D) internal rate of return and net present value methods

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Definitions:

Transfer Price

The price at which goods and services are transferred between departments or subsidiaries of the same company, often used for accounting and tax purposes.

Market Price Approach

A valuation method that estimates the price of an asset based on the current market prices of similar assets.

Decentralization

The distribution of decision-making authority to lower levels in an organization, allowing for more localized and faster decision processes.

Separate Office Staff

A designated group of employees who work in a distinct physical or administrative division within an organization.