Question

Which of the following capital budgeting techniques consider the cost of capital?

(1) Net Present Value

(2) Internal Rate of Return

(3) Profitability Index

(4) Payback Period

(5) Discounted Payback Period

Question 14 options:

	(1) and (2)
	(1)
	(1) and (2) and (3)
	(1) and (2) and (3) and (5)

Answer 1

Option (d) is correct

1,2 ,3 and 5 are the techniques that consider the cost of capital.

Net present value, Internal rate of return, Profitability index and discounted payback period, all use cost of capital because all theses techniques are based on time value of money.