Which One of the Following Capital Budgeting Decision Methods Measures

question 26

Multiple Choice

Which one of the following capital budgeting decision methods measures how long it takes for a project's benefits to recover the project's cost?

• A)profitability index
• B)payback period
• C)modified internal rate of return
• D)net present value

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is reflected as an asset and changes in the value of the investment adjust the investor's income.

Realized Gains

Profits that are recognized when assets are sold for a price higher than their book value.

Equity Method

is an accounting technique used to record investments in associated companies where the investor has significant influence but not full control.

Cost Method

An accounting method used to value holdings in another company at the cost of acquisition plus any additional costs incurred.