Capital Budgeting and Cost Benefit Analysis
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- Capital Budgeting and Cost Benefit Analysisaccounting-mcqs › cost-accounting-mcqs › capital-budgeting-and-cost-benefit-analysis
- Published
- 27 Apr 2023
- Last updated
- 28 May 2026
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Explanation
To find the real interest rate, use the formula: Real Rate ≈ Nominal Rate - Inflation Rate. Here, 26% - 12% = 14%, but the exact calculation is (1 + 0.26) / (1 + 0.12) - 1 = 0.125 or 12.5%. Therefore, the correct answer is 12.50%.
More Capital Budgeting and Cost Benefit Analysis MCQs
Practice related questions from the same subject.
- 1.Given a tax operating income of $885,000 annually and a net initial investment of $35,750,000, what is the percentage increase in average return?
- 2.Based on the net present value criterion, which projects should be considered acceptable?
- 3.What type of cash flows are utilized in both the net present value and internal rate of return methods?
- 4.What is obtained by dividing the sum of recovered working capital and the net initial investment by 2?
- 5.What term describes the project's anticipated financial loss or gain calculated by discounting all cash inflows and outflows at the required rate of return?
- 6.Which rate of return consists of both the risk-free component and the business risk component?
- 7.When calculating for a steady annual increase in future cash flows, the payback period is multiplied to determine __________?
- 8.Which dimensions are considered in the dimensional analysis of cost?
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