Which Capital Budgeting Method Is Most Useful for Evaluating a Project

question 113

Multiple Choice

Which capital budgeting method is most useful for evaluating a project that has an initial after-tax cost of $5,000,000 and is expected to provide after-tax operating cash flows of $1,800,000 in year 1, ($2,900,000) in year 2, $2,700,000 in year 3, and $2,300,000 in year 4?

• A) net present value
• B) internal rate of return
• C) payback
• D) accounting rate of return

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Definitions:

Persuasion Routes

In psychology, refers to the different ways in which individuals can be persuaded, notably divided into the central route and peripheral route as per the Elaboration Likelihood Model.

Fear Appeals

A persuasive message that attempts to arouse fear in order to divert behavior through the threat of harmful consequences.

Tobacco Labelling

Regulations and practices related to the information provided on tobacco product packaging, including health warnings and ingredients.

Elaboration Likelihood Model

A theory in psychology that explains different ways of processing stimuli, why they are used, and their outcomes on attitude change.