Which of the Following Methods Utilizes Discounted Cash Flows When

question 112

Multiple Choice

Which of the following methods utilizes discounted cash flows when analyzing potential capital expenditures?
Methods:
1) Accrual accounting rate-of-return
2) Internal Rate of Return (IRR)
3) Payback Period
4) Net Present Value (NPV)

• A) 1 only
• B) 1 and 2
• C) 1 and 3
• D) 2 and 4

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Definitions:

Test Statistic

A value calculated from sample data during a hypothesis test that is used to determine whether to reject the null hypothesis.

P-value

A measure in statistical hypothesis testing representing the probability of obtaining test results at least as extreme as the results actually observed, under the assumption that the null hypothesis is true.

Test Statistic

A value calculated from sample data that is used in a hypothesis test to decide whether to reject the null hypothesis.

P-value

The probability of observing test results at least as extreme as the results actually observed, under the assumption that the null hypothesis is correct.