Manag., December-2019 – Q73
0. Which of the following methods of capital budgeting is best suited for leveraged projects?
- Option : A
- Explanation : An organization has to take many decisions regarding the expansion of business and
investment. In such cases, the organization will take the help of the NPV method and base its decision on the same.
Net present value is used in Capital budgeting to analyze the profitability of a project or investment. It is calculated by taking the difference between the present value of cash inflows and present value of cash outflows over a period of time.
As the name suggests, net present value is nothing but net off of the present value of cash inflows and outflows by discounting the flows at a specified rate.
