Which of the Following Capital Budgeting Models Is Generally the Simplest

question 51

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:

Other Revenues

Income generated from activities that are not part of a company's primary operations, such as rental income, interest income, or gains from the sale of fixed assets.

Earnings Per Share

A financial metric calculating the portion of a company's profit allocated to each outstanding share of common stock.

Preferred Stock Dividends

Payments made to preferred shareholders, typically fixed, that take priority over common stock dividends.

Cumulative Preferred Stock

A type of preferred stock where dividends must be paid, including any arrears, before any dividends can be distributed to common shareholders.