Which Method of Evaluating Capital Investment Proposals Uses Present Value

question 93

Multiple Choice

Which method of evaluating capital investment proposals uses present value concepts to compute the rate of return from the net cash flows?

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

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Definitions:

Factory Overhead Cost

The indirect expenses related to the manufacturing process, including utilities, depreciation, and maintenance of equipment.

Direct Labor Cost

The expense associated with employees directly involved in the production of a company's products, reflecting wages for tasks that are integral to manufacturing.

Conversion Cost

The combined costs of direct labor and manufacturing overhead, reflecting the expenses to convert raw materials into finished goods.

Factory Overhead Cost

Indirect costs associated with manufacturing, such as utilities, maintenance, and salaries for managers, that cannot be traced directly to specific products.