Consider the following statements about capital budgeting. |
a. _______ is (are) more appropriate for long-term investments. |
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b. _______ highlights risky investments. |
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c. _______ shows the effect of the investment on the company’s accrual-based income. |
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d. _______ is the interest rate that makes the NPV of an investment equal to zero. |
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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. |
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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. |
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i. _______ uses accrual accounting rather than net cash inflows in its computation. |
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Requirement: |
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1. Fill in each statement with the appropriate capital budgeting method: Payback period, ROR, NPV, or IRR. |