Evaluate capital budgeting project

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Reference no: EM132061054

1. Although there is no truly risk free investment, we sometimes use the return on ___ as a risk free rate of return.

a. A stock with a low beta

b. A stock with a high beta

c. corporate bonds

d. short term debt of the US government

2. A start up company might use the payback period, rather than NPV, to evaluate capital budgeting project because

a. Such a firm might need funds and have difficulty raising additional money

b. Payback deals with accounting profits and is thus a good indicator of which capital budgeting projects to accept

c. Payback does a better job than NPV in taking time value of money into consideration

d. All of the above are reasons for a start up to prefer payback over NPV

Reference no: EM132061054

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