Which of the Following Statements Is Trueregarding Capital Budgeting Methods

question 179

Multiple Choice

Which of the following statements is trueregarding capital budgeting methods?

• A)The Fisher rate can never exceed a company's cost of capital.
• B)The internal rate of return measure used for capital project evaluation has more conservative assumptions than the net present value method,especially for projects that generate a positive net present value.
• C)The net present value method of project evaluation will always provide the same ranking of projects as the profitability index method.
• D)The net present value method assumes that all cash inflows can be reinvested at the project's cost of capital.

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Definitions:

Freedom From Want

A concept popularized by President Franklin D. Roosevelt as one of the Four Freedoms, referring to the right to an adequate standard of living and economic security.

Consumerism

The theory or policy that promotes an increasing consumption of goods as an economic policy or social system.

Standard Of Living

Refers to the level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

Great Depression

A severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States, marked by high unemployment and poverty.