Question
f a company is in the situation of having unlimited capital funds, the best decision rule, considering only financial factors, is for the company to
f a company is in the situation of having unlimited capital funds, the best decision rule, considering only financial factors, is for the company to invest in all projects in which:
The payback period is short. | ||
The accounting (book) rate of return (ARR) is greater than its current return on invested capital (ROI). | ||
The net present value (NPV) is greater than the cost of capital. | ||
The internal rate of return (IRR) is greater than zero. | ||
The NPV is greater than zero. |
Which one of the following is the estimated rate (i.e., percentage) that makes the discounted present value of future cash flows of a project equal to the initial investment outlay for the project?
Weighted-average cost of capital (WACC). | ||
Payback period, in years. | ||
Book (accounting) rate of return. | ||
Internal rate of return (IRR). | ||
Accounting rate of return (ARR), after tax. |
For dealing with uncertainty in the capital budgeting process, all of the following techniques can be used except which one?
What-if analysis. | ||
Monte Carlo simulation. | ||
Scenario analysis. | ||
Linear programming. | ||
Real options analysis. |
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