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:

Shares Outstanding

The total number of a company's shares that are owned by shareholders, including both public and private entities, available in the market.

Current Asset

Assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of the business, whichever is longer.

Statement Of Financial Position

Another term for a balance sheet; it shows a company's assets, liabilities, and equity at a specific point in time.

Intangible Asset

An asset that lacks physical substance but provides economic benefits to its owner, such as trademarks, patents, and goodwill.