Which of the Following Capital Budgeting Models Is Generally the Simplest

question 115

Multiple Choice

Which of the following capital budgeting models is generally the simplest to compute?

• A)Payback
• B)Net present value
• C)Internal rate of return
• D)Accounting rate of return

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Definitions:

PMSI

Purchase Money Security Interest, a legal claim that allows a lender to repossess or foreclose on property if the borrower defaults, specifically when the loan was used to purchase the property.

Priority Rule

A principle in law that determines the precedence of claims, rights, or interests in order to resolve conflicts between parties.

Inventory

The total amount of goods and materials held in stock by a business, intended for sale or production purposes.

Ordinary Course

Activities or transactions that are regular, customary, and in keeping with the normal operations of a business or individual’s day-to-day life.