Capital rationing exists when we have positive NPV investments available but we Blank______. Multiple choice question. do not have the required engineering expertise to undertake them. do not have the sufficient time to undertake them. do not undertake them due to high risk. cannot get the needed funds to undertake them.

The following is a disadvantage of ARR investment appraisal method (select one):   A. multiple or no solutions   B. does not take into account time value of money   C. easy to explain   D. management performance is rarely evaluated based on ARR

Commitment to prior investments escalates and makes it harder to abandon prior investments even if it may not make rational sense is called __________ .   Multiple Choice   sunk cost fallacy   committed cost fallacy   commitment cost fallacy   cost abandonment fallacy

Ignoring differences in the useful lives of investments when evaluating capital expenditure alternatives A B с D cannot be addressed by adjusting cash flow assumptions of the proposals can distort present value analysis and adversely affect decisions will never distort present value analysis or adversely affect decisions reduces complexity and improves decision making

Which of the following is a disadvantage of the internal rate of return criterion? Select one: a. It is not a true rate of return. b. It uses an arbitrary benchmark cutoff rate. c. It ignores time value of money, cash flows, and market values. d. It cannot be used to rank independent projects. e. It may lead to incorrect decisions when comparing mutually exclusive investments.

Consider the following statement: In a capital rationing problem withdivisible investments, if all projects have positive present worths, all of theinvestment capital will be used. Solve, a. This statement is true b. This statement is false c. Not enough information is given; the numeric values of the present worths of the projects are required to know whether this statement is true or false d. Not enough information is given; the numeric values of the IRRs of the projects and the value of MARR are required to know whether this statement is true or false

Which of the following statements is inaccurate under perfect capital markets? A. The NPV of a project determines whether it is worth investing in it B. How much an investor should invest in a particular project does not depend on the investor’s risk preferences C. Whether an investor should invest in a project or not does not depend on the investor’s intertemporal preferences D. Whether a long term project should be undertaken does not depend on whether the investor is patient or impatient

may force the firm to forgo positive NPV projects or to rely on costly external equity financing. A Moving to another question will save this response.

Help Save a Select the Incorrect statement regarding postaudlts of capital Investment decislons. Multiple Choice A postaudit should be conducted at the end of the project. The postaudit helps management determine whether a project that had been accepted should have been rejected. A postaudit is only necessary for a capital investment selected using a technique that does not consider the time value of money. The goal ofa postaudit is to provide feedback that can be used to improve the accuracy of future capital investment decisions.

Which of the following is a disadvantage of the IRR project evaluation method? Select one: a. It does not take into account the time value of money. b. If there are negative cash flows after positive cash flows, there may be zero or multiple internal rates of return. c. It does not make adequate allowance for risk. d. It focuses on accounting profit rather than cash flow as the source of value.