Match the items of List – I with the items of List – II : List – I List – II a. Net present value i.…
Net Present Value (NPV) is the difference between the present value of cash inflows and outflows (iv), Payback Period is the number of years needed to recover the initial…
Choose your answer
Match the items of List – I with the items of List – II :
List – I
List – II a. Net present value i. Number of years required to recover the original cash outlay invested in a project. b. Payback period ii. It is the rate of return which equates the present value of anticipated net cash flows with the initial outlay. c. Internal rate of return
iii. It is found out by dividing the average after-tax profit by the average investment. d. Accounting rate of return
iv. It is the difference between the present value of cash inflows and present value of cash outflows.
Answer and explanation
Correct answer D
Net Present Value (NPV) is the difference between the present value of cash inflows and outflows (iv), Payback Period is the number of years needed to recover the initial cash outlay (i), Internal Rate of Return (IRR) is the discount rate that equates the present value of net cash inflows with the initial outlay (ii), and Accounting Rate of Return (ARR) divides average after-tax profit by average investment (iii).
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UGC NET Management