When Managers Make Decisions That Are Rational but Limited by Their

question 120

Multiple Choice

When managers make decisions that are rational but limited by their ability to process the information, they are following the concept of ________.

• A) cognitive decision making
• B) bounded rationality
• C) escalation of commitment
• D) intuitive decision making

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Definitions:

Discount Rate

In discounted cash flow analysis, the interest rate that is used to evaluate the present value of anticipated cash flows.

Net Present Value

Net Present Value (NPV) is a financial metric that calculates the total value today of a series of future cash flows, adjusting for the time value of money.

Capital Budgeting

The process of planning and managing a company's long-term investments in major projects or assets.

Discount Rate

The interest rate that discounted cash flow analysis relies on to calculate the current worth of prospective cash flows.