Which of the Following Is a Reason That Makes NPV

question 114

Multiple Choice

Which of the following is a reason that makes NPV a better approach to capital budgeting on a purely theoretical basis?

• A) It measures the benefits relative to the relative amount invested.
• B) The reinvestment rate assumed by this method is reasonable.
• C) Financial decision makers are inclined to higher rates of return.
• D) Interest rates are expressed as annual rates of return.

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Definitions:

Horizontal Division

The organizational structure that involves dividing a company based on different types of jobs or tasks, leading to departments that are on the same level.

Line Units

Core units or departments in an organization that are directly involved in its primary activities or objectives.

Decentralization

The degree to which the authority to make decisions is given to lower levels in an organization’s hierarchy.

Hierarchy of Authority

A system in organizations where individuals are ranked according to their roles and responsibilities, establishing a clear line of command from top to bottom.