Conclusions about capital budgeting are valid

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Reference no: EM131883125

1. Which of the following conclusions about capital budgeting are valid? Check all that apply?

Managers have been slow to adopt the IRR because percentage returns are a harder concept for them to grasp.

The AAR has more economic significance than the IRR, because it relies upon readily available accounting data.

Because the PI and NPV both focus on value added to shareholder wealth, they always lead to the same accept/reject decision for mutually exclusive projects.

The discounted payback period improves on the regular payback period by accounting for the time value of money.

The NPV is the best project criterion, because it shows how much value the company is creating for its shareholders.

Because NPV is the best project criterion, only it should be used and the other criteria should be ignored.

2. What will happen to the yield (return) an investor will receive when they pay less for an investment (stock, bond, art work) (holding all else constant)?

A-The yield will be more

B-The yield will be less

C-It is not possible to know

D-The yield is not related to the price

Reference no: EM131883125

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