For Each of the Capital Budgeting Methods Listed Below, Place

question 116

Essay

For each of the capital budgeting methods listed below, place an X in the correct column, indicating the measurement basis of each, the ability to make comparison among projects, and whether each method reflects or ignores the time value of money.
$\begin{array}{c}\begin{array}{|c}\hline\text { } \\\text { }\\\hline\begin{array}{l}\\\\\\\\\hline \text { Payback period } \\\hline \text {Accounting rate of return } \\\hline \text { Net present value } \\\hline \text { Internal rate of return } \\\hline \end{array}\end{array}\begin{array}{|c|}\hline\text { Measurement } \\\text { Basis }\\\hline\begin{array}{c|c}\\\\ \text { Cash } & \text { Accrual } \\\text { Flows } & \text { Income } \\\hline & \\\hline & \\\hline & \\\hline & \\\hline\end{array}\end{array}\begin{array}{c|}\hline\text {Comparison among } \\\text { Projects }\\\hline\begin{array}{c|c}\\\\\text { Allows }&\text { Difficult to } \\\text { Comparison }&\text { Compare }\\\hline & \\\hline & \\\hline & \\\hline & \\\hline\end{array}\end{array}\begin{array}{c|}\hline\text { Time Value of } \\\text {Money }\\\hline\begin{array}{c|c}\text { Reflects } &\text { Ignores } \\\text { Time }&\text { Time } \\\text { Value of } &\text { Value of }\\\text { Money }&\text { Money }\\\hline & \\\hline & \\\hline & \\\hline & \\\hline\end{array}\end{array}\end{array}$

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Definitions:

Overhead

Refers to the ongoing business expenses not directly attributed to creating a product or service, such as rent, utilities, and administrative costs.

Work In Process Inventory

Work In Process Inventory consists of partially completed goods that are still in production, representing a component of a manufacturing company's inventory.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Indirect Labor

Labor costs not directly associated with the production of goods or services, such as salaries of supervisors and maintenance staff.