A Manager Wants to Know Which Investment Decision Will Affect

question 135

Multiple Choice

A manager wants to know which investment decision will affect the bottom line of the financial statements according to Generally Accepted Accounting Principles. Which capital budgeting method would he choose?

• A)Payback method
• B)Accounting rate of return method
• C)Net present value method
• D)Profitability index

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Definitions:

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it. (Also known as the I-knew-it-all-along phenomenon.)

Generalized Beliefs

Broad opinions or convictions that individuals hold without specific evidence or direct experience to support them.

Negative Emotions

Feelings or emotions that are unpleasant or undesirable, such as sadness, anger, fear, or jealousy.

Cognitive Dissonance

A psychological phenomenon that occurs when an individual experiences mental discomfort due to holding contradictory beliefs, ideas, or values at the same time.