Although the Three Capital Budgeting Methods Are Equivalent, They All

question 36

Multiple Choice

Although the three capital budgeting methods are equivalent, they all can have difficulties making computation impossible at times.The most useful methods or tools from a practical standpoint are:

• A)APV because debt levels are unknown in future years.
• B)WACC because projects have constant risk and target debt to value ratios.
• C)Flow-to-equity because of constant risk and that managers think in terms of optimal debt
• To equity ratios.
• D)Both A and B.
• E)Both B and C.

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Definitions:

p < .05

A statistical term indicating that the probability of the observed data, or more extreme, if the null hypothesis were true, is less than 5%, often used as a threshold for statistical significance.

Experimental Group

In research, a group of subjects who receive the treatment or variable being tested for its effect.

Control Group

The group in an experiment or study that does not receive the experimental treatment, serving as a baseline for comparison with the experimental group.

Mathematical Summaries

The use of statistics, such as mean, median, mode, and range, to provide a comprehensive overview of numerical data.