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:

Z-Scores

A measure that represents the number of standard deviations a data point is from the mean of the dataset.

Z-Score

A statistical metric that describes a value's relationship to the mean of a group of values, measured in terms of standard deviations.

Z-Score

A statistical measure that describes a score's relationship to the mean in a group of scores, typically used to understand how far a point is from the average in terms of standard deviations.

Z-Score

A numerical indicator that represents how a specific value compares to the average of a dataset, illustrated by the number of standard deviations it is from that average.