Which interpretation is a correct description of a funding budgeting method?Real choice evaluation is the ratio of payoff to investment of a proposed job.The interior price of rerevolve is the discount rate that offers a net existing worth of zero.Equivalent annuity method essentially value projects as if they were risk bonds.The profitcapability index is the moment forced for an investment to "repay" the original investment.
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The internal rate of rerotate is the discount rate that gives a net existing value of zero.The inner price of rerevolve (IRR) is identified as the discount rate that offers a net current value (NPV) of zero. It is a generally supplied measure of investment performance.
Which of the following is a function of corporate capital budgeting?To rank tasks by profitabilityTo carry out a history of past earnings and expendituresTo encourage managers to run independently of other business operations and departmentsTo help managers via reacting to difficulties after they arise
To rank jobs by profitabilityCapital Budgeting is most connected in ranking projects and also raising funds when long-term investment is taken into account.
firm is trying to choose the most profitable project to invest in. Which attribute need to be used as the company"s discount rate?The company"s reinvestment rateThe company"s weighted average price of capitalThe company"s profitability indexThe company"s inner price of return
The company"s reinvestment rateSelection of the discount price is dependent on the usage to which it will be put. If the intent is sindicate to determine whether a project will certainly add value to the agency, utilizing the firm"s weighted average cost of capital might be correct. If trying to decide in between different investments in order to maximize the worth of the firm, the corporate reinvestment price would certainly be a far better choice.
Which statement mirrors the finest reason to usage the payback strategy to evaluate investments?The payback approach covers all cash inflows and outflows for the duration of the investment.If you use the payago technique, you do not have to perform added analyses.The payearlier technique helps gauge a project"s threat.The payago technique is simple to use and also understandable for a lot of people, regardmuch less of training.
The payago technique is easy to usage and understandable for a lot of world, regardless of training.Payago period is widely used bereason of its ease of usage despite the well-known limitations: The time value of money is not taken into account.
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Which investment proposal ranking strategy is commonly used due to its simplicity, despite having several limitations?Profitcapacity IndexNet Present Value (NPV)Internal Rate of Rerevolve (IRR)Payback period
Payago periodPayback duration is widely provided bereason of its ease of use despite numerous recognized limitations, such as not taking right into account the moment value of money.