Which Methods of Evaluating a Capital Investment Project Ignore the Time

question 161

Multiple Choice

Which methods of evaluating a capital investment project ignore the time value of money?

• A)Net present value and accounting rate of return.
• B)Accounting rate of return and internal rate of return.
• C)Internal rate of return and payback period.
• D)Payback period and accounting rate of return.
• E)Net present value and payback period.

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Definitions:

Market Price

The price at which an asset or service is currently traded in the market.

Stock Repurchase

The act of a company buying back its own shares from the marketplace, which can reduce the number of outstanding shares and potentially increase share value.

Retained Earnings

The part of a company's earnings that is not distributed as dividends to its shareholders but is instead reinvested or saved.

Dividend Cut

A reduction in the dividend amount paid by a corporation to its shareholders, often due to financial difficulties or the need to conserve cash.