What Is the Capital Budgeting Method That Divides a Project's

question 128

Multiple Choice

What is the capital budgeting method that divides a project's annual incremental net income by the initial investment?

• A) The internal rate of return method.
• B) The simple (or accounting) rate of return method.
• C) The payback method.
• D) The net present value method.

---

Definitions:

Paid-in Capital

Funds raised by a company through the issuance of shares, representing the capital contributed by shareholders.

Dividends in Arrears

Dividends in arrears are dividends that a corporation has not yet paid out to its shareholders for preferred stock, accumulative from prior periods.

Repurchase

The act of buying back previously sold stock or bonds from the market or shareholders by the issuing company, often to reduce the amount of outstanding shares and increase the value of remaining shares.

Book Value

Book value is the net value of a company's assets found on its balance sheet, calculated as the total assets minus intangible assets and liabilities.