Which Capital Budgeting Technique Defines Returns in Terms of Income

question 56

Multiple Choice

Which capital budgeting technique defines returns in terms of income instead of cash flows?

• A) The unadjusted rate of return method
• B) The internal rate of return technique
• C) The net present value technique
• D) The payback period

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Definitions:

Financing Activities

Financial transactions primarily concerned with how a business finances its overall operations and growth by using different sources of funds.

Cash Equivalents

Short-term, highly liquid investments that can be quickly converted into a known amount of cash, typically with original maturities of three months or less.

Marketable Securities

Financial instruments that can be easily converted into cash, typically with short maturities and high liquidity.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not considered to be cash equivalents.