Q314
Match the following methods of capital budgeting with respective formulas: Method Formulas a. ARR method 1. Present Value of Cash Inflows - Present Value of Cash Outflows b. Pay back period Method 2. Present Value of Cash Inflows ÷ Present Value of Cash Outflows c. NPV Method 3. Average Income ÷ Average Investment d. Probability Index 4. Investment ÷ Annual Cash Inflows Choose the correct option from those given below
Match the following methods of capital budgeting with respective formulas:
Choose the correct option from those given below
| Method | Formulas |
| a. ARR method | 1. Present Value of Cash Inflows - Present Value of Cash Outflows |
| b. Pay back period Method | 2. Present Value of Cash Inflows ÷ Present Value of Cash Outflows |
| c. NPV Method | 3. Average Income ÷ Average Investment |
| d. Probability Index | 4. Investment ÷ Annual Cash Inflows |
A.
a-3, b-1, c-4, d-2
B.
a-3, b-4, c-1, d-2
AnswerC.
a-1, b-2, c-3, d-4
D.
a-1, b-4, c-2, d-3
Answer: Option B
Solution
Answer: Option B
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