Which of the Following Statements Is True About Capital Budgeting

question 40

Multiple Choice

Which of the following statements is true about capital budgeting analysis?

• A) Higher discount rates are used for computing the net present values (NPVs) of riskier cash flows.
• B) A project with only cash outflows and no cash inflows would have two internal rates of return (IRRs).
• C) The payback period method should be used for capital budgeting decisions if there is a conflict in the project rankings as per the NPV method and the IRR method.
• D) The net present value (NPV) method should be used to evaluate independent projects, and the internal rate of return (IRR) method for mutually exclusive projects.
• E) The payback period method should be used for capital budgeting decisions if the project has multiple cash outflows.

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Definitions:

Hormones

Chemical messengers produced by the endocrine glands that regulate the activity of certain cells or organs, essential for every activity of daily living, including the processes of digestion, metabolism, growth, reproduction, and mood control.

Posterior Pituitary Gland

A gland located at the base of the brain that releases hormones like oxytocin and vasopressin, which are produced in the hypothalamus.

Hormones

Regulatory substances produced in organisms to stimulate specific cells or tissues into action.

Endocrine Gland

A gland that secretes hormones directly into the bloodstream to regulate various body functions.