Question: Match each definition with its capital budgeting method. METHODS 1. Accounting rate of return 2. Internal rate of return 3. Net present value 4. Payback

Match each definition with its capital budgeting method.

METHODS

1. Accounting rate of return

2. Internal rate of return

3. Net present value

4. Payback

DEFINITIONS

a. Is only concerned with the time it takes to get cash outflows returned.

b. Considers operating income but not the time value of money in its analyses.

c. Compares the present value of cash outflows to the present value of cash inflows to determine investment worthiness.

d. The true rate of return an investment earns.

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