1. True or False? The three rules used in judging the merits of an investment are that investors prefer more cash rather than less cash, cash sooner rather than later, and more risk rather than less risk.

2. True or False? The biggest risk of both the accounting return on investment and the payback period methods of capital budgeting is that they do not factor the time value of money into their

What is a potential reason that a small business owner would be reluctant to use some of the financial forecasting and budgeting techniques that you've read about in this chapter?

a. Because of the uncertainty in predicting the future, they struggle to make educated guesses a few years down the road.

b. They fully trust their gut decisions

c. Banks and other lenders they work with don't know about these techniques.

d. Many of their projects are so small that it takes too much work to create a model to help make informed decisions.