The Capital Budgeting Decision Technique That Reflects the Time Value

question 104

Multiple Choice

The capital budgeting decision technique that reflects the time value of money and is calculated as the present value of the future after-tax cash inflows divided by the initial cash outlay for the investment is called the:

• A) Net present value (NPV) method.
• B) Capital rationing method.
• C) Average accounting rate of return (ARR) method.
• D) Profitability index (PI) method.
• E) Present value payback method.

---

Definitions:

Rearing

The process of caring for and bringing up children or young animals, focusing on their health, education, and emotional development.

Theories

Systematically organized principles that have been formulated to explain and predict phenomena within a certain domain of inquiry.

Study of Personality

The field of psychology that explores individual differences in characteristic patterns of thinking, feeling, and behaving.

Understand

The ability to comprehend or grasp the meaning, significance, or nature of something.