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:

Pacinian

Referring to Pacinian corpuscles, pressure-sensitive mechanoreceptors that respond to deep, transient pressure and vibration.

Ruffini Corpuscles

Sensory receptors located in the skin that detect stretch, pressure, and warmth, playing a role in the sensation of touch and control of finger position.

Merkel Cells

Specialized cells found in the skin that are involved in the sense of touch, particularly in detecting pressure and texture.

Receptive Field

The specific area within the visual world that elicits a response from any sensory neuron.