This Technique for Evaluating Capital Projects Tells How Long It

question 84

Multiple Choice

This technique for evaluating capital projects tells how long it will take a firm to earn back the money invested in a project plus interest at market rates.

• A) payback
• B) discounted payback
• C) net present value
• D) profitability index

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Definitions:

Compounded Monthly

Interest calculation method where interest is added to the principal sum each month, resulting in interest on interest.

12%

A percentage value often used to denote a rate, such as an interest rate or growth rate.

$50,000

A numerical monetary value, often used to indicate a specific amount in financial transactions.

8.4%

A percentage value, which could represent an interest rate, a portion, or a growth rate in various financial contexts.