Both the Net Present Value Method and the Internal Rate

question 2

Multiple Choice

Both the net present value method and the internal rate of return method focus on:

• A) periodic depreciation charges.
• B) cash flows.
• C) annuity discount factors.
• D) total acquisition costs.

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Definitions:

Budget

Company’s plan for how it will raise and spend money during a given period of time.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company at using its assets to generate revenue or sales.

Return On Equity

A financial ratio that measures the amount of net income returned as a percentage of shareholders' equity, indicating the profitability of a company relative to owner's investments.

Profitability Ratio

A financial metric used to evaluate a company's ability to generate income relative to its revenue, operating costs, balance sheet assets, or shareholders' equity.