The Basic Capital Budgeting Decision Models (That Is NPV and IRR)

question 73

Multiple Choice

The basic capital budgeting decision models (that is NPV and IRR) handle risk by _____.

• A) ignoring it
• B) assuming all cash flows are known with certainty
• C) assuming all projects are of average risk
• D) using risk-adjusted discount rates to evaluate projects

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Definitions:

Behaviourism

A school of psychology that focuses on observable behaviors and disregards mental activities.

Functionalism

A theory in psychology that considers mental life and behavior in terms of active adaptation to the person's environment.

William James

Often referred to as the father of American psychology, he was a philosopher and psychologist who was the first educator to offer a psychology course in the United States, making significant contributions to psychology, especially in the areas of education, religion, and mysticism.

Conscious Experience

The state of being aware of and able to think about one's own existence, sensations, thoughts, surroundings, etc.