The importance of capital investments and the capital budgeting process [15-20 min]
You have just started a business and want your new employees to be well informed about capital budgeting.
Requirement
1. Match each definition with its capital budgeting method.
METHODS
1. Rate of return.
2. Internal rate of return.
3. Net present value.
4. Payback period.
DEFINITIONS
A. Is only concerned with the time it takes to get cash outflows returned.
B. Considers operating income but not the time value of money in its analyses.
C. Compares the present value of cash out to the cash in to determine investment worthiness.
D. The true rate of return an investment earns.
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