Which of the Following Figures of Merit Might Not Use

question 24

Multiple Choice

Which of the following figures of merit might not use all possible cash flows in its calculations?
I.Payback period
II.Internal rate of return
III.Net present value (NPV)
IV.Accounting rate of return

• A) III only
• B) I & III only
• C) II & III only
• D) I & IV only
• E) III & IV only
• F) I, II, III, and IV

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Definitions:

Depreciation

The allocation of an asset's cost over its useful life, reflecting a decrease in the value of tangible and intangible assets over time.

Subsidies

Financial support provided by the government to organizations or individuals, making goods or services more affordable.

Transfer Payments

Payments made by the government to individuals without any services or goods being received in return, such as welfare payments or social security benefits.

GDP

Gross Domestic Product entails the comprehensive valuation of every good and service produced in a country over a particular period, serving as a gauge for economic performance.