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AICPA Exam CPA-Business Topic 3 Question 80 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 80
Topic #: 3
[All CPA-Business Questions]

All of the following are the rates used in net present value analysis, except for the:

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Suggested Answer: C

Choice 'c' is correct. The most logical sequence in planning and controlling capital expenditures is to begin with identifying capital addition projects and other capital needs.

Choice 'a' is incorrect. Analyzing capital addition proposals omits other capital needs.

Choice 'b' is incorrect. Analyzing and evaluating all promising alternatives is beyond the scope of planning and controlling capital expenditures.

Choice 'd' is incorrect. Developing capital budgets is the same as planning and controlling capital expenditures.


by Jovita at Jan 22, 2024, 03:00 PM

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Alaine
16 days ago
The accounting rate of return? Really? I'd be accounting for my time if I chose that option.
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Leanora
19 days ago
Haha, the accounting rate of return? What is this, an accounting exam? NPV is all about those juicy discount rates, baby!
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Mitsue
27 days ago
Ah, I see what they're getting at. The accounting rate of return is a measure of profitability, not a rate used in NPV. Good catch!
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Carrol
1 months ago
I'm pretty sure the cost of capital, hurdle rate, and discount rate are all essential for NPV calculations. The accounting rate of return seems out of place here.
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Jaclyn
24 days ago
A) Cost of capital.
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Glen
1 months ago
Hmm, the accounting rate of return is definitely not a rate used in NPV analysis. That's more of an accounting metric, not a financial one.
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Fernanda
7 days ago
B) Hurdle rate.
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Kenny
9 days ago
A) Cost of capital.
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Noble
1 months ago
I'm not sure, but I think D) Accounting rate of return doesn't really fit with the other rates mentioned.
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Flo
2 months ago
I agree with Amina, because the other options are all related to rates used in net present value analysis.
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Amina
2 months ago
I think the answer is D) Accounting rate of return.
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Annmarie
2 months ago
I'm not sure, but I think D) Accounting rate of return doesn't belong because it's not a rate used in NPV analysis.
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Leonora
2 months ago
I agree with Glory, because the other options are all related to rates used in net present value analysis.
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Glory
2 months ago
I think the answer is D) Accounting rate of return.
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