COST ACCOUNTING
CAPITAL BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Payback Method
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Present Tenses
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Discounted Cash Flows
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Average Return On Investment
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Detailed explanation-1: -Net Present Value, Internal Rate of Return, and Discounted Payback Period are three popular economic criteria for evaluating whether or not to invest in a capital asset. All three concepts give consideration to the time value of money.
Detailed explanation-2: -Present value (PV) is the current value of a future sum of money or stream of cash flows given a specified rate of return. Present value takes the future value and applies a discount rate or the interest rate that could be earned if invested.
Detailed explanation-3: -► Principle 1: Money Has a Time Value. ► Principle 2: There is a Risk-Return Tradeoff. ► Principle 3: Cash Flows Are the Source of Value.
Detailed explanation-4: -(i) Equal distribution of income and wealth. (ii) Balanced and rapid growth of the economy. (iii) To raise the gross and national product and per capita income. (iv) Proper allocation of existing resources.