Which of the Following Statements Considering Investment Appraisal Methods Are

question 24

Multiple Choice

Which of the following statements considering investment appraisal methods are correct?
(i) Payback Period is based on Cashflow,not profits
(ii) ARR is based on cashflow,not profits
(iii) Discounted Cashflow includes the Time Value of Money in the calculation

• A) They are all correct
• B) (i) is false. (ii) and (iii) are correct
• C) (i) and (iii) are correct. (ii) is false
• D) They are all false

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Definitions:

Rights Offering

A method by which a company raises capital by giving its existing shareholders the right to purchase additional shares at a discounted price before the stock is offered to the public.

Subscription Price

The price at which existing shareholders or subscribers can purchase new shares of a company during a rights offering before it is offered to the public.

Market Price

The present market rate for trading an asset or service.

Subscription Price

The fixed price at which existing shareholders can purchase additional shares of stock before it is offered to the public.