For Which Capital Investment Evaluation Technique Is the Following a Complete

question 394

Multiple Choice

For which capital investment evaluation technique is the following a complete list of its disadvantages when compared to NPV analysis? (1) Ignores cash flows beyond the cutoff date; (2) Requires an arbitrary cutoff point; (3) Biased against long-term projects; (4) May reject positive NPV projects.

• A) NPV
• B) IRR
• C) AAR
• D) Payback period
• E) Discounted payback

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Definitions:

Absorption Spectra

Absorption spectra are the range of wavelengths or frequencies of light absorbed by a substance, each substance having a unique spectrum that can be used to identify it or analyze its properties.

Pigments

Substances that produce color in materials by absorbing certain wavelengths of light and reflecting others, found in nature in plants, animals, and minerals.

Visible Light

The portion of the electromagnetic spectrum that is visible to the human eye, ranging approximately from 380 to 750 nanometers in wavelength.

Photosynthetic Pigments

Molecules found in plants and other photosynthetic organisms that absorb light energy for use in photosynthesis, including chlorophyll and carotenoids.