Which One of the Following Capital Budgeting Proposals Is Most

question 43

Multiple Choice

Which one of the following capital budgeting proposals is most apt to be associated with a conflict of interests?

• A) The proposal with the highest NPV
• B) The proposal with the longest payback period
• C) The proposal with the highest IRR and quickest payback
• D) The proposal to solve pollution problems cited by the EPA

---

Definitions:

Consignment

An arrangement in which goods are left in the possession of another party to sell, but the consignor retains ownership until the goods are sold.

Net Realizable Value

The estimated selling price of an asset in the ordinary course of business minus any costs of completion, transportation, and necessary selling expenses.

Direct Costs of Disposal

The expenses directly linked to the process of disposing of an asset, including sales fees and legal costs.

Decreasing Costs

A situation where the expenses of producing a good or service fall over time, typically due to efficiency improvements or economies of scale.