Answer:
C
Explanation:
Capital budgeting are the methods employed by is the process that a businesses to determine which which investments to accept, and which should be declined.
Some of the capital budgeting methods are :
1. Net present value
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
2. Internal Rate of Return
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
3. Profitability Index
profitability index = 1 + (NPV / Initial investment)
4. Accounting rate of return = Average net income / Average book value
Average book value = (cost of equipment - salvage value) / 2
5. Payback period
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = Amount invested / cash flow
6. Discounted payback period
Discounted payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative discounted cash flows
