A division manager is considering a project that requires a significant initial investment.The company's top management will not approve any project that does not return at least 12%.The manager will most likely use which of the following capital investment models?

Question

Quizplus · Accepted Answer

The company's requirement of at least 12% return can be best evaluated using the net present value (NPV) model, which takes into account the time value of money and discounts future cash flows to the present using a discount rate. The other investment models listed (payback period, accounting rate of return, and internal rate of return) do not directly consider the required return rate and may not provide an accurate evaluation of the project's profitability. Therefore, the best choice is C, net present value.

A Division Manager Is Considering a Project That Requires a Significant