a-2, b-3, c-1, d-4
a-3, b-1, c-4, d-2
a-1, b-4, c-2, d-3
a-4, b-2, c-3, d-1
Answer is Right!
Answer is Wrong!
The correct answer is: A. a-2, b-3, c-1, d-4
- Payback rate of return is a crude method for project evaluation. It is the number of years it takes for the initial investment to be recovered from the project’s cash flows.
- Internal rate of return is a discounted cash flow technique. It is the rate of return that makes the present value of the project’s cash flows equal to zero.
- Benefit cost ratio is a method for evaluating projects that have both benefits and costs. It is the ratio of the present value of the project’s benefits to the present value of its costs.
- Net terminal value method is a method for evaluating projects that have varying sized cash flows. It is the difference between the present value of the project’s cash flows and the initial investment.
Here is a more detailed explanation of each option:
- Payback rate of return is a crude method for project evaluation because it does not take into account the time value of money. It also does not consider the project’s risk.
- Internal rate of return is a discounted cash flow technique because it takes into account the time value of money. It also considers the project’s risk. However, it can be difficult to calculate.
- Benefit cost ratio is a method for evaluating projects that have both benefits and costs. It is a simple method to calculate, but it does not take into account the time value of money.
- Net terminal value method is a method for evaluating projects that have varying sized cash flows. It is a more complex method to calculate than the payback rate of return or the benefit cost ratio, but it takes into account the time value of money.