With the Improvement in the Technology and Understanding of Discounting

question 41

Multiple Choice

With the improvement in the technology and understanding of discounting techniques, both the net present value (NPV) technique and internal rate of return (IRR) technique used in capital budgeting analyses have become more popular because these techniques provide decisions that help the firm to _____. 

• A)minimize its overall payback period
• B)maximize it required rate of return
• C)maximize its value
• D)minimize the number of multiple IRRs computed for every project
• E)maximize the initial capital investment

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Definitions:

Reasonableness

A standard of fairness, appropriateness, and rationality often used in legal and ethical judgments.

Goodwill

An intangible asset reflecting the value of a company's brand, customer relations, employee morale, and other non-physical assets.

Enforce

To compel observance of or obedience to a law, rule, or obligation.

Negotiated Clause

A provision in a contract that has been specifically discussed and agreed upon by all parties involved.