Question
In class, we studied three capital budgeting techniques: payback period, net present value (NPV), and internal rate of return (IRR). (i) How are different capital
In class, we studied three capital budgeting techniques: payback period, net present value (NPV), and internal rate of return (IRR). (i) How are different capital budgeting techniques related? (ii) Which capital budgeting methods do firms actually use?
Group of answer choices: All techniques except traditional payback period (PB) are based on time value of money. Most firms rely heavily on PB to make investment decisions however. All techniques except traditional payback period (PB) are based on time value of money. Most firms rely heavily on NPV and IRR to make investment decisions. All techniques except traditional payback period (PB) are not based on time value of money. Most firms rely heavily on NPV and IRR to make investment decisions. All techniques except NPV and IRR are based on time value of money. Most firms rely heavily on traditional payback period (PB) to make investment decisions.
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