# Basic Capital Budgeting

1) Which are the following are correct:

--one drawback of the discounted payback is that this method does not consider the time value of money, while the regular payback overcomes this drawback.

--one drawback of the payback criterion is that this method does not take account of cash flows beyond the payback period.

--The regular payback ignores cash flows beyond the payback period, but the discounted payback method overcomes this problem.

----The shorter a project's payback period, the less desirable the project is normally considered to be this criterion.

---If a project's payback is positive, the the project should be accepted because it must have a positive NPV.

--The payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

--The discounted payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

--The net present value method (NPV) is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

--The internal rate of return method (IRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

--The modified internal rate of return method (MIRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

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#### Solution Preview

1) Which are the following are correct:

--one drawback of the discounted payback is that this method does not consider the time value of money, while the regular payback overcomes this drawback.

False

--one drawback of the payback criterion is that this method does not take account of cash flows beyond the payback period.

Correct

--THe regular payback ignores cash flows beyond ...

#### Solution Summary

Solution explains Basic Capital Budgeting