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Multiple Choice: Capital Budgeting

1. The Payback method is widely used in capital budgeting because it is simple and does a good job of determining the correct accept/reject decision.
a. True

b. False

2. When using the Internal Rate of Return (IRR) method to evaluate investments, those with an IRR greater than zero should be selected, and those with an IRR less than zero should be rejected.
a. True

b. False

3.When the Cost of Capital (that is, the Discount Rate) increases, the Net Present Value of investments under consideration increases also.

a. True

b. False

Solution Summary

The solution answer 3 multiple choice related to Capital Budgeting.

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