If a Firm Is More Concerned About the Quick Return

question 96

Multiple Choice

If a firm is more concerned about the quick return of its initial investment than it is about the amount of value created,then the firm is most apt to evaluate a capital project using the ________ method of analysis.

• A)internal rate of return
• B)net present value
• C)modified internal rate of return
• D)payback
• E)profitability index

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Definitions:

Contingent Liabilities

Possible liabilities that depend on the outcome of a future event, not recognized as liabilities on the balance sheet unless both probable and measurable.

Pre-acquisition Equity

Refers to the equity interest in a company that exists before it is acquired by another entity.

Post-acquisition Equity

The equity interest in a subsidiary held by the parent company after accounting for any changes since the acquisition date.

Accounting Policies

The particular standards, foundations, norms, regulations, and methods used by an organization to compile and display its financial records.