Which of the Following Choices Correctly Depicts Whether Discounted Cash

question 71

Multiple Choice

Which of the following choices correctly depicts whether discounted cash flows are used by the method noted when evaluating long-term investments? $\begin{array}{llll}&\begin{array}{c}\text { Net } \\\text { Present Value }\end{array} & \begin{array}{c}\text { Internal Rate } \\\text { of Return }\end{array} & \begin{array}{l}\text { Accounting } \\\text { Rate of Return }\end{array}\\\hline\text { A. } & \text { No } & \text { No } & \text { Yes } \\\text { B. } & \text { Yes } & \text { No } & \text { Yes } \\\text { C. } & \text { Yes } & \text { No } & \text { No } \\\text { D. } & \text { Yes } & \text { Yes } & \text { No } \\\text { E. } & \text { Yes } & \text { Yes } & \text { Yes }\end{array}$

• A) Choice A
• B) Choice B
• C) Choice C
• D) Choice D
• E) Choice E

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Definitions:

Net Operating Working Capital

The difference between a company's current assets and its current liabilities, excluding short-term debt. It is indicative of a company's operational liquidity.

Balance Sheet

A report that provides an overview of a business's financial position, including what it owns (assets), owes (liabilities), and the value that remains for the shareholders (equity) at a particular moment.

Current Liabilities

Current liabilities are a company's debts or obligations that are due within one year.

Free Cash Flow

A financial metric that represents the amount of cash generated by a company after accounting for capital expenditures, essential for evaluating its liquidity, flexibility, and overall financial health.