GK
ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Payout period method
|
|
|
Pay back period method
|
|
|
Profitability Index method
|
|
|
Net present value method
|
Detailed explanation-1: -The benefit-cost ratio (BCR) is a profitability indicator used in cost-benefit analysis to determine the viability of cash flows generated from an asset or project. The BCR compares the present value of all benefits generated from a project/asset to the present value of all costs.
Detailed explanation-2: -Capital Budgeting Question 11 Detailed Solution The correct answer is Benefit Cost ratio. Profitability index is the ratio of present value of cash inflows and present value of cash outflows.
Detailed explanation-3: -The Profitability Index (PI) measures the ratio between the present value of future cash flows and the initial investment. The index is a useful tool for ranking investment projects and showing the value created per unit of investment.