The Capital Budgeting Method That Recognises the Time Value of Money

question 41

Multiple Choice

The capital budgeting method that recognises the time value of money by discounting cash flows over the life of the project, using the company's required rate of return as the discount rate is called the

• A)simple rate of return method.
• B)the net present value method.
• C)the internal rate of return method.
• D)the payback methoD.

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Definitions:

Population Mean

The average value of a characteristic in a population, representing the central tendency of the population data.

Confidence Interval

A confidence interval is a range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter at a given confidence level.

Variability

Describes the spread or dispersion of a set of data points within a dataset, indicating how much the data points differ from each other.

Population Standard Error

A measure of the estimation uncertainty in predicting a population parameter based on a sample statistic.