Circle the letter of the best response.

1. Which of the following is correct?

A. Capital budgeting methods produce the same decision and their use is based on the information available.

B. The internal rate of return method does not consider the time value of money.

C. The net present value method considers the time value of money.

D. The cost of capital is the companys desired rate of return.

2. Which of the following capital decision methods assumes that income is the same over the life of an investment?

A. Accounting Rate of Return

B. Internal Rate of Return

C. Net Present Value

D. Payback method