All of the Following Are Involved in the Capital Budgeting

question 46

Multiple Choice

All of the following are involved in the capital budgeting evaluation process except a company's

• A) board of directors.
• B) capital budgeting committee.
• C) officers.
• D) stockholders.

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Definitions:

Average Accounting Return (AAR)

An investment’s average net income divided by its average book value.

Return on Equity (ROE)

A measure of financial performance calculated by dividing net income by shareholders' equity, reflecting the profitability relative to the equity.

Return on Assets (ROA)

A financial ratio indicating how profitable a company is relative to its total assets, calculated as net income divided by total assets.

Discounted Payback

The period of time it takes for the cash flows from an investment to equal the initial cost of the investment, accounting for the time value of money.