Which of the Following Statements Is True About Capital Budgeting

question 19

Multiple Choice

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

• A)A project should be purchased if its net present value (NPV) is positive.
• B)A project with only cash outflows and no cash inflows would have two internal rates of return (IRRs).
• C)The traditional payback period method should be used for capital budgeting decisions when there is a conflict in the project rankings using the NPV method and the internal rate of return (IRR) method.
• D)The net present value (NPV) method should be used to evaluate independent projects, but the internal rate of return (IRR) method should be used to evaluate mutually exclusive projects.
• E)The payback period method should be used to evaluate capital budgeting projects that have multiple cash outflows.

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