The Net Present Value Method Assumes That the Cash Inflows

question 106

Multiple Choice

The net present value method assumes that the cash inflows from a project are immediately reinvested at the

• A)internal rate of return.
• B)required rate of return.
• C)market rate of return.
• D)accounting rate of return.

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Definitions:

Return On Equity

A financial ratio that measures the profitability of a business in the relation to the equity, indicating how effectively shareholder equity is being utilized.

Price-Earnings Ratio

A financial ratio that measures a company's current share price relative to its per-share earnings.

Debt-To-Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity, indicating the proportion of equity and debt used to finance a company's assets.

Dividend Payout Ratio

A financial ratio that measures the proportion of earnings paid out as dividends to shareholders.