In Capital Rationing, Alternative Proposals Are Initially Screened for Minimum

question 133

Multiple Choice

In capital rationing, alternative proposals are initially screened for minimum standards using which of the following two evaluation methods?

• 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 method and net present value method

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for competition based on price, quality, and marketing.

Profit-Maximizing Quantity

The level of production at which a company can achieve the highest possible profit, balancing additional costs against additional revenues.

Perfect Competition

A theoretical market structure characterized by many buyers and sellers, homogenous products, and no barriers to entry or exit, leading to optimal distribution of resources.

Lose Customers

The consequence faced by a business when it fails to meet the needs or expectations of its consumers, leading to a decrease in its customer base.