Consider the following statements about capital budgeting. a._____ is (are) more appropriate for long-term investments. b._____ highlights

Question:

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

Discounted Cash Flows
What is Discounted Cash Flows? Discounted Cash Flows is a valuation technique used by investors and financial experts for the purpose of interpreting the performance of an underlying assets or investment. It uses a discount rate that is most...
Capital Budgeting
Capital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the...
Capital Rationing
Capital rationing is the act of placing restrictions on the amount of new investments or projects undertaken by a company. Capital rationing is the decision process used to select capital projects when there is a limited amount of funding available....
Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial and Managerial Accounting

ISBN: 978-0132497978

3rd Edition

Authors: Horngren, Harrison, Oliver

Question Posted: