The Following Are Measures Used by Firms When Making Capital

question 41

Multiple Choice

The following are measures used by firms when making capital budgeting decisions except:

• A) Payback period
• B) Internal rate of return
• C) P/E ratio
• D) Net present value

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Definitions:

Consolidated Net Income

The total net income of a parent company and its subsidiaries, after adjustments for minority interests, reported on a combined basis as if the group were a single entity.

Fair Value Enterprise Method

A valuation technique that estimates the value of an entire enterprise as if it were traded in the market, often used in the context of business combinations.

Cumulative Dividends

Dividends that accumulate if not paid in a given year, typically associated with preferred shares, and must be paid out before any dividends are given to common shareholders.

Discontinued Operations

Parts of a company's core business or subsidiaries that have been sold or liquidated.