If a Company Is in the Situation of Having Unlimited

question 19

Multiple Choice

If a company is in the situation of having unlimited capital funds, the best decision rule, considering only financial factors, is for the company to invest in all projects in which:

• A) The payback period is short.
• B) The accounting (book) rate of return (ARR) is greater than its current return on invested capital (ROI).
• C) The net present value (NPV) is greater than the cost of capital.
• D) The internal rate of return (IRR) is greater than zero.
• E) The NPV is greater than zero.

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Definitions:

Paired Comparison

A method used to evaluate, rank, or choose between alternatives by comparing them directly with each other in pairs.

Ranking

Ranking is the act of ordering or classifying entities based on criteria or performance, often used for comparison or competitive purposes.

Forced Distribution

A performance evaluation method where employee evaluations are distributed along a bell curve, forcing a ranking of employees into categories.

Performance Management

The comprehensive approach of setting objectives, assessing progress, and providing ongoing feedback to ensure that employees meet their career goals and organizational needs.