Question

Match the items of the following two lists and suggest the correct code:

List-I	List-II
(a) Pay-back Rate of Return	(i) Discounted Cash Flow Technique
(b) Internal Rate of Return	(ii) Compounded values of investments and returns
(c) Benefit Cost Ratio	(iii) Crude method for project evaluation
(d) Net Terminal Value Method	(iv) Varying sized projects evaluation

• A. $\left(a\right)-\left(ii\right),\left(b\right)-\left(iii\right),\left(c\right)-\left(i\right),\left(d\right)-\left(iv\right)$
• B. $\left(a\right)-\left(iii\right),\left(b\right)-\left(i\right),\left(c\right)-\left(iv\right),\left(d\right)-\left(ii\right)$
• C. $\left(a\right)-\left(i\right),\left(b\right)-\left(iv\right),\left(c\right)-\left(ii\right),\left(d\right)-\left(iii\right)$
• D. $\left(a\right)-\left(iv\right),\left(b\right)-\left(ii\right),\left(c\right)-\left(iii\right),\left(d\right)-\left(i\right)$

Answer 1

The correct option is B $\left(a\right)-\left(iii\right),\left(b\right)-\left(i\right),\left(c\right)-\left(iv\right),\left(d\right)-\left(ii\right)$

• The payback reciprocal is a crude estimate of the rate of return for a project or investment.
• The internal rate of return (IRR) is a discounting cash flow technique which gives a rate of return earned by a project.
• A benefit-cost ratio (BCR) is a ratio used in a cost-benefit analysis to summarize the overall relationship between the relative costs and benefits of a proposed project.
  
• The terminal value method is an improvement over the net present value method of making capital investment decisions.