Which of the following is a common capital budgeting method?

Question

Quizplus · Accepted Answer

Net present value (NPV) is a common capital budgeting method. It involves calculating the present value of all expected cash inflows and outflows associated with a proposed investment and subtracting the initial investment. The result represents the project's net present value, and a positive NPV indicates that the project is expected to generate a return above the required rate of return. Return on assets (ROA), Inventory turnover, and Debt-to-equity ratio are not capital budgeting methods. ROA is a measure of a company's profitability, inventory turnover is a measure of how efficiently a company is managing its inventory, and Debt-to-equity ratio is a measure of a company's financial leverage.

Which of the Following Is a Common Capital Budgeting Method