BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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an investigation of the incomes produced by the venture
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cost of capital puts resources into business/ project
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Both A and B
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Neither A and B
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Detailed explanation-1: -A manager must gather information to forecast cash flows for each project in order to determine its expected profitability. This is because the decision to accept or reject a capital investment is based on such an investment’s future expected cash flows.
Detailed explanation-2: -Capital budgeting can be classified into two types: traditional and discounted cash flow. Within each type are several budgeting methods that can be used.
Detailed explanation-3: -Answer: (B) Payback period. Explanation: A basic strategy for capital budgeting is the Payback Period.
Detailed explanation-4: -The Protability Index is computed by dividing the present value of cash inows of the capital investment by the present value of cash outows of the capital investment. If the Protability Index is greater than one, the capital investment is accepted. If it is less than one, the capital investment is rejected.