Which of the Following Statements Is True of Capital Budgeting

question 16

Multiple Choice

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

• A) A project's discounted payback is normally shorter than its regular payback because discounted payback takes account of the required rate of return.
• B) In the NPV method, the discount rate is specified and the equation is solved for NPV, while in the IRR method the NPV is set equal to zero and the discount rate is found.
• C) If the required rate of return is less than the crossover rate for two mutually exclusive projects' NPV profiles, a NPV/IRR conflict will not occur.
• D) If you are choosing between two projects that have the same life, and if their NPV profiles cross, then the smaller project will probably be the one with the steeper NPV profile.
• E) If the required rate of return is relatively high, this will favor larger, longer-term projects over smaller, shorter- term alternatives because it is good to earn high rates on larger amounts over longer periods.

---

Definitions:

Empirically Oriented

An approach that relies on observation, experimentation, and evidence rather than theory or pure logic.

Mind Cure Movement

A historical movement focused on the belief that the mind has the power to heal the body through positive thinking and faith.

Mind Cure Movement

A historical movement that emphasized the power of positive thinking and belief in the mind's ability to heal the body without traditional medical intervention.

Cognitive Therapies

A group of psychotherapeutic approaches that aim to change problematic thoughts, beliefs, and attitudes to improve emotional regulation and develop personal coping strategies.