Within the Context of Capital Budgeting, a Primary Goal-Congruency Problem

question 156

Multiple Choice

Within the context of capital budgeting, a primary goal-congruency problem exists when discounted cash flow (DCF) models are used for decision-making purposes, but accrual-based earnings figures are used for subsequent performance-evaluation purposes. Which of the following items is not likely to be useful for addressing this goal-congruency problem?

• A) Monte Carlo simulation.
• B) Use of EVA® as the financial-performance metric.
• C) Separating incentive compensation (i.e., "reward") from budgeted performance.
• D) Conducting post-audits of capital investment decisions.

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Definitions:

Human Rights

The universal rights inherent to all human beings, regardless of race, sex, nationality, ethnicity, language, religion, or any other status.

Budget and Policies

Refers to the planned allocation of financial resources and the set of rules or guidelines that govern fiscal management within an organization or government.

Manager

An individual responsible for controlling or administering an organization or group of staff.

Compassion Fatigue

A form of emotional and physical exhaustion often experienced by those providing care to others, characterized by a decreased ability to empathize.