which of the following capital budgeting methods focuses on firm liquidity? course hero

Which method of evaluation of capital budgeting focuses on liquidity?

Q.Which of the following method of evaluation of capital budgeting proposals focuses on liquidity?B.net present valueC.accounting rate of returnD.payback periodAnswer» d. payback period1 more row

Which of the following capital budgeting method focuses on net income rather than cash flows?

The accounting rate of return is the only method that focuses on net income rather than cash flow.

Which of the following methods focuses on the maximization of wealth of shareholders *?

Which of the following method of evaluation of capital budgeting proposals focuses on liquidity?...Q.Which of the following methods focuses the maximisation of wealth of shareholders?D.internal rate of returnAnswer» c. profitability index3 more rows

Which of the following capital budgeting techniques takes into account the accounting income rather than cash flows?

The correct answer is “Accounting rate of return (ARR)” (option 3). Accounting rate of return takes into account the project's impact on net operating income rather than cash flows.Jan 11, 2022

Is a capital budgeting model that ignores the time value of money and focuses on the profitability of an investment project?

PaybackKey Takeaways Payback ignores the time value of money. Payback ignores cash flows beyond the payback period, thereby ignoring the ” profitability ” of a project. To calculate a more exact payback period: Payback Period = Amount to be Invested/Estimated Annual Net Cash Flow.

How is capital budgeting?

Capital budgeting is used by companies to evaluate major projects and investments, such as new plants or equipment. The process involves analyzing a project's cash inflows and outflows to determine whether the expected return meets a set benchmark.

What is wealth maximization in financial management?

Wealth maximization is the concept of enhancing the value of a business with the objective of pushing up the value of the shares held by stockholders.

What do you mean by wealth maximization objective of a firm?

Wealth maximization is the concept of increasing the value of a business in order to increase the value of the shares held by its stockholders.Nov 25, 2021

What is wealth maximization Why is wealth maximization preferred over profit maximization?

Wealth maximization is superior to the profit maximization because the main aim of the business concern under this concept is to improve the value or wealth of the shareholders. Wealth maximization considers the comparison of the value to cost associated with the business concern.Jun 26, 2016

What are five methods of capital budgeting?

5 Methods for Capital BudgetingInternal Rate of Return. ... Net Present Value. ... Profitability Index. ... Accounting Rate of Return. ... Payback Period.Aug 1, 2017

Which capital budgeting technique is best?

The net present value approach is the most intuitive and accurate valuation approach to capital budgeting problems. Discounting the after-tax cash flows by the weighted average cost of capital allows managers to determine whether a project will be profitable or not.

Which of the following involves capital budgeting?

Question: The process of analyzing and deciding which long-term investments to make is called a capital budgeting decision, also known as a capital expenditure decision. Capital budgeting decisions involve using company funds (capital) to invest in long-term assets.