An internal rate of return in capital budgeting can be modified to make it representative of_________?
Correct answer: D. Relative profitability
- A. Relative outflow
- B. Relative inflow
- C. Relative cost
- D. Relative profitability
Explanation
Modified internal rate of return improves the conventional IRR by incorporating financing and reinvestment assumptions, making project profitability comparisons more meaningful. It is therefore associated with relative profitability.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Practise Business Finance
975 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Business Finance questions
Other factors held constant, greater project liquidity is because of___________?
Project whose cash flows are sufficient to repay capital invested for rate of return then net present value will be_________?
Process in which managers of company identify projects to add value is classified as__________?
Situation in which firm limits expenditures on capital is classified as________?
If net present value is positive, then profitability index will be__________?
Sum of discounted cash flows is best defined as____________?