Which Capital Budgeting Method Is Most Useful for Evaluating the Following

question 54

Multiple Choice

Which capital budgeting method is most useful for evaluating the following project? The project has an initial after tax cost of $5,000,000 and it 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) NPV.
• B) IRR.
• C) Payback.
• D) Two of the above.

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Definitions:

Noise

Unwanted or irrelevant information that obscures or interferes with the interpretation of data.

Business Conversations

Dialogues or discussions related to the activities, concerns, or operations of a business.

Crisis Response

The strategies and actions taken by an organization or government to manage and mitigate the impact of an unexpected, negative event.

Recall

The process of requesting the return of a product batch or entire line due to the discovery of safety issues, defects, or non-compliance with regulations.