Question
Which capital budgeting tool is optimal and why? Question 6 options: IRR, because companies need to earn a return over the hurdle rate! NPV, because
Which capital budgeting tool is optimal and why?
Question 6 options:
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IRR, because companies need to earn a return over the hurdle rate!
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NPV, because it has none of the shortcomings of the other two methods.
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Payback, because it doesn't take time value of money into consideration.
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IRR, because you can get multiple IRRs and that is a good thing. Just pick the higher one!!!
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None of the Capital Budgeting tools we studied are optimal. They ALL have SERIOUS flaws!!!
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A and B are both correct. We always use both and they are equally useful and free of flaws.
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None of the above!!! Every answer choice is pure nonsense!!!
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Entrepreneurial Finance Venture Capital Deal Structure And Valuation
Authors: Janet Kiholm Smith, Richard L. Smith
2nd Edition
1503603210, 978-1503603219
