Which of the Following Methods Utilizes Discounted Cash Flows When

question 112

Multiple Choice

Which of the following methods utilizes discounted cash flows when analyzing potential capital expenditures?
Methods:
1) Accrual accounting rate-of-return
2) Internal Rate of Return (IRR)
3) Payback Period
4) Net Present Value (NPV)

• A) 1 only
• B) 1 and 2
• C) 1 and 3
• D) 2 and 4

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Definitions:

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices during a given period.

Supply Conditions

Factors that affect the ability and willingness of producers to offer goods and services for sale, including technology, resource prices, and regulatory environment.

Supply Curve

A graph showing the relationship between the price of a good and the quantity supplied, with a positive slope indicating that higher prices will lead to higher quantities supplied.

Equilibrium Price

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded, leading to market stability.