The decision process Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and implement long-term investment proposals that meet firm-specific criteria and are consistent with the firm's strategic goals. Companies often use several methods to evaluate the project's cash flows and each of them has its benefits and disadvantages. Based on your understanding of the capital budgeting evaluation methods, which of the following conclusions about capital budgeting are valid? Check all that apply. O Managers have been slow to adopt the IRR, because percentage returns are a harder concept for them to grasp. For most firms, the reinvestment rate assumption in the NPV is more realistic than the assumption in the IRR. IRR The discounted payback period improves on the regular payback period by accounting for the time value of money. NPV is the single best method to use when making capital budgeting decisions.
The decision process Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and implement long-term investment proposals that meet firm-specific criteria and are consistent with the firm's strategic goals. Companies often use several methods to evaluate the project's cash flows and each of them has its benefits and disadvantages. Based on your understanding of the capital budgeting evaluation methods, which of the following conclusions about capital budgeting are valid? Check all that apply. O Managers have been slow to adopt the IRR, because percentage returns are a harder concept for them to grasp. For most firms, the reinvestment rate assumption in the NPV is more realistic than the assumption in the IRR. IRR The discounted payback period improves on the regular payback period by accounting for the time value of money. NPV is the single best method to use when making capital budgeting decisions.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:The decision process
Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and implement long-term investment
proposals that meet firm-specific criteria and are consistent with the firm's strategic goals.
Companies often use several methods to evaluate the project's cash flows and each of them has its benefits and disadvantages. Based on your
understanding of the capital budgeting evaluation methods, which of the following conclusions about capital budgeting are valid? Check all that apply.
O Managers have been slow to adopt the IRR, because percentage returns are a harder concept for them to grasp.
For most firms, the reinvestment rate assumption in the NPV is more realistic than the assumption in the IRR.
IRR
The discounted payback period improves on the regular payback period by accounting for the time value of money.
NPV
is the single best method to use when making capital budgeting decisions.
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