On a Purely Theoretical Basis, the NPV Is the Better

question 99

Multiple Choice

On a purely theoretical basis, the NPV is the better approach to capital budgeting due to all thefollowing reasons EXCEPT

• A) that it measures the benefits relative to the amount invested.
• B) that it maximizes shareholder wealth.
• C) that there may be multiple solutions for an IRR computation.
• D) for the reasonableness of the reinvestment rate assumption.

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Definitions:

Dual-route Theories

Theories proposing that there are two distinct pathways in the brain for processing information, often contrasting automatic with controlled processes.

Internal Needs

Fundamental psychological or physiological necessities that drive behavior and must be met for an individual to achieve well-being.

Growth Needs

Psychological needs that drive an individual to seek out new challenges, personal development, and opportunities for growth.

Maslow's Theory

A psychological theory proposing a hierarchy of human needs, from basic physiological needs to self-actualization.