Which Methods of Evaluating a Capital Investment Project Use Cash

question 103

Multiple Choice

Which methods of evaluating a capital investment project use cash flows as a measurement basis?

• A)Net present value,accounting rate of return,and internal rate of return.
• B)Internal rate of return,payback period,and accounting rate of return.
• C)Accounting rate of return,net present value,and payback period.
• D)Payback period,internal rate of return,and net present value.
• E)Net present value,payback period,accounting rate of return,and internal rate of return.

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Definitions:

Cost of Capital

The rate of return that a company must earn on its projects to maintain its market value and attract funds.

MCC

This abbreviation could stand for multiple concepts depending on the context; without further context, it's difficult to provide a specific definition.

IOS

Investment opportunity schedule. A schedule of capital budgeting projects arranged in decreasing order of IRR.

WACC

Weighted Average Cost of Capital; it represents a firm's blended cost of capital across all sources, including both debt and equity.