Consider the following statements about capital budgeting.
a. _______ is (are) more appropriate for long-term investments.
b. _______ highlights risky investments.
c. _______ shows the effect of the investment on the company's accrual-based income.
d. _______ is the interest rate that makes the NPV of an investment equal to zero.
e. In capital rationing decisions, management must identify the discount rate when the _______ method is used.
f. _______ provides management with information on how fast the cash invested will be recouped.
g. _______ is the rate of return, using discounted cash flows, a company can expect to earn by investing in the asset.
h. _______ does not consider the asset's profitability.
i. _______ uses accrual accounting rather than net cash inflows in its computation.
Requirement:
1. Fill in each statement with the appropriate capital budgeting method: Payback period, ROR, NPV, or IRR.