Net present value, profitability index, payback and discounted payback are methods to______________?
Correct answer: B. Evaluate projects
- A. Evaluate cash flow
- B. Evaluate projects
- C. Evaluate budgeting
- D. Evaluate equity
Explanation
Net present value, profitability index, payback period and discounted payback period are capital-budgeting techniques used to assess whether investment projects should be accepted. They evaluate project cash flows and returns rather than equity itself.
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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.
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