Which of the following capital budgeting techniques employ some sort of arbitrary value against which the project measurement must be compared when determining whether to accept or reject a project?

I. Net present value

II. Average accounting return

III. Profitability index

IV. Discounted payback

A) II and IV only

B) II, III, and IV only

C) I and II only

D) I, II, and IV only

E) I, III, and IV only

A project has conventional cash flows and a positive net present value. It can be stated with certainty that the project is acceptable according to the capital budgeting technique known as:

A) Payback Period.

B) Discounted Payback Period.

C) The Accounting Rate of Return.

D) All of the above.

E) None of the above.

Which of the following statements concerning the Average Accounting Return is (are) false?

I. The information used in the AAR calculation is easily obtainable.

II. A project is accepted if the target AAR exceeds the project AAR.

III. The AAR ignores the time value of money.

IV. The AAR is based on cash flows and market values.

A) III only

B) IV only

C) I and III only

D) II and IV only

E) II, III, and IV only