Which of the Following Are Two Methods of Analyzing Capital

question 22

Multiple Choice

Which of the following are two methods of analyzing capital investment proposals that both ignore present value?

• A) internal rate of return and average rate of return
• B) net present value and average rate of return
• C) internal rate of return and net present value
• D) average rate of return and cash payback method

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Definitions:

Depreciation

A measure of the decrease in value of an asset over time, often due to wear and tear or obsolescence.

Inventory Investment

Refers to the change in the level of stocked goods in a period, contributing to the calculation of Gross Domestic Product (GDP).

Net Investment

The total spending on new capital assets minus the depreciation on existing capital.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life, reflecting a decrease in value over time.