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.