here are four principal decision models for evaluating and selecting investment projects:

	Net present value (NPV)
	Profitability index (PI)
	Internal rate of return (IRR)
	Payback period (PB)

Which method recognizes the real option aspects of a proposed capital investment?

PB and discounted PB

None of the methods (NPV, IRR, PI, PB, or discounted PB) recognizes the real option aspects of a capital investment

IRR and PI

IRR

Read the following statements and categorize whether they characterize the IRR, NPV, PB, or PI decision criteria:

Statement	IRR	NPV	PB	PI
Provides an easy-to-interpret benchmark value, since a value of one indicates a project that earns the firms minimum acceptable return
Its value is expressed or denominated in units of a currency, such as dollars
This value should not be used to decide whether to accept or reject a project