Which of the Following Capital Budgeting Techniques Implicitly Assumes That $\begin{array}{lrr} \text {Net Present Value}& \text { Internal Rate of Return}\\\end{array}$

question 67

Multiple Choice

Which of the following capital budgeting techniques implicitly assumes that the cash flows are reinvested at the company's minimum required rate of return?

$\begin{array}{lrr} \text {Net Present Value}& \text { Internal Rate of Return}\\\end{array}$

A. $\begin{array}{lrr} &&\text { Yes } &&&&&&&& \text { Yes } &\\\end{array}$

B. $\begin{array}{lrr}&& \text { Yes } &&&&&&&& \text { No} &\\\end{array}$

C. $\begin{array}{lrr} && \text { No} &&&&&&&& \text { No } &\\\end{array}$

D. $\begin{array}{lrr} && \text { No } &&&&&&&& \text { Yes } &\\\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

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Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot increase proportionally.

Total Product Curve

A graphical representation showing the relationship between the total output produced and the quantity of a single input.

Intentional Tort

A wrongful act done on purpose, the perpetrator being aware of their actions aiming to cause harm or injury.