Which of the Following Is Used as the Equation's Numerator

question 9

Multiple Choice

Which of the following is used as the equation's numerator when computing the payback period for a capital asset with equal annual net cash inflows?

• A)Expected annual cash inflow
• B)Total cash inflows
• C)Amount invested
• D)Net cash outflow

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Definitions:

Divisions

Distinct business units or sections within a company, each responsible for certain aspects of the organization's operations.

ROI

Return on Investment; a performance measure used to evaluate the efficiency of an investment by comparing the amount of return relative to the investment's cost.

Residual Income

The income that remains after deducting all required costs of capital from the net operating income.

Investment Centers

Divisions or units within an organization that are responsible for both generating revenue and controlling costs, thus having an impact on the investment returns.