________ Is a Capital Budgeting Model That Ignores the Time

question 45

Multiple Choice

________ is a capital budgeting model that ignores the time value of money and focuses on the profitability of an investment project.

• A) Payback model
• B) Internal rate of return model
• C) Accounting rate of return model
• D) Real options model

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Definitions:

Break-Even Revenue

The amount of income needed to cover all operating expenses, with no profit or loss.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent or salaries.

Variable Cost

Costs that change in proportion to the good or service that a business produces.

Profit

The financial gain obtained when the revenue from selling goods or services exceeds the total cost of producing them.