For What Reason Are the Net Present Value and Internal

question 101

Multiple Choice

For what reason are the net present value and internal rate of return methods of capital budgeting superior to the payback method?

• A) Both the methods are easier to implement.
• B) Both the methods consider the time value of money.
• C) Both the methods require less input.
• D) Both the methods reflect the effects of depreciation and income taxes.

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Definitions:

MU/P

The marginal utility per unit of price, which helps to calculate how much satisfaction consumers derive from purchasing additional units of a product relative to its cost.

Newly Introduced Product

A product that has recently been launched into the market, often featuring new or innovative characteristics.

Existing Product

A product that has already been developed and is available in the market for consumers.

Marginal Utility

The additional satisfaction or utility gained by consuming an additional unit of a good or service.