Net Present Value and the Payback Period Are Examples of Discounted

question 168

True/False

Net present value and the payback period are examples of discounted cash flow methods used in capital budgeting decisions.

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Definitions:

Capital Intensity Ratio

A metric showing the amount of capital needed per dollar of revenue; high ratios indicate a significant investment in physical capital to generate sales.

Full Capacity

The maximum level of output that a company can produce with its current resources and technology, without incurring additional costs.

Total Assets

The sum of all resources owned by a company, valued in monetary terms, including current and long-term assets.

Dependent Means

Statistical measures that represent the average outcomes within an experiment that are expected to change in response to the independent variable.