The Capital Budgeting Method That Divides a Project's Annual Incremental

question 34

Multiple Choice

The capital budgeting method that divides a project's annual incremental net operating income by the initial investment is the:

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

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Definitions:

Statement of Cash Flows

A financial report summarizing the total cash inflows and outflows experienced by a company.

Operating Activities

The day-to-day actions that businesses undertake to generate earnings, such as selling products or services.

Financing Activities

Activities that result in changes in the size and composition of the equity and borrowings of a company, as reported in the cash flow statement.

Statement of Cash Flows

is a financial statement that details the inflows and outflows of cash within a company over a specific period, highlighting its operating, investing, and financing activities.