The net present value, profitability index, payback and discounted payback are the methods to __________?
Correct answer: B. evaluate projects
- A. evaluate cash flow
- B. evaluate projects
- C. evaluate budgeting
- D. evaluate equity
Explanation
NPV, profitability index, payback and discounted payback are capital-budgeting tools used to assess whether proposed investment projects should be accepted. They compare project benefits, costs and recovery time rather than evaluating 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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