Match each of the following descriptions, a through (h), with a capital budgeting method: (1) payback method,
Question:
Match each of the following descriptions, a through \(h\), with a capital budgeting method: (1) payback method, (2) net present value, (3) profitability index, or (4) internal rate of return. More than one method may apply.
a. Requires the use of a hurdle rate to interpret results.
b. May not recognize all relevant project cash flows.
c. Provides the relation of an output measure to an input measure.
d. The calculation relies on the use of a valid discount rate.
e. Does not consider the time value of money.
f. Used to rank projects based on each project's cash inflows relative to initial investment.
g. Assumes that the life of a project is accurately estimated.
h. Of primary consideration is a rapid recovery of the initial investment.
Step by Step Answer:
Cost Accounting Foundations And Evolutions
ISBN: 9781618533531
10th Edition
Authors: Amie Dragoo, Michael Kinney, Cecily Raiborn