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6. Conclusions about capital budgeting Aa Aa The decision process Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and implement long-term investment proposals that meet firm-specific criteria and are consistent with the firms strategic goals. Companies often use several methods to evaluate the projects cash flows and each of them has its benefits and disadvantages. Based on your understanding of the capital budgeting evaluation methods, which of the following conclusions about capital budgeting are valid? Check all that apply. Managers have been slow to adopt the IRR, because percentage returns are a harder concept for them to grasp. The NPV shows how much value the company is creating for its shareholders. For most firms, the reinvestment rate assumption in the MIRR is more realistic than the assumption in the IRR. is the single best method to use when making capital budgeting decisions IRR NPV

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Home nert Page Layout Formulas Data Review View dd-Ins Cut copy ▼ Format Painter E AutoSum ー E ゴWrap Text ▲· 逻锂函Merge & Center. $, % , 弼,8 Paste B I 프 . 灬 Conditional Format CeInsert Delete Format Formatting as Table Styles2 Clear Sort &Find & Clipboard CX211 CU Font Alignment Number Cells Edting CV cW CX CY cZ DA DB DC DE DF DG DH 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 (4 トト1 | IRRnpv | RATION PBP ARR. external rate CHECK ALL THAT APPLY THE NPV SHOWS HOW MUCH VALUE THE COMPANY IS CREATING FOR SHAREHOLDERS FOR MOST FIRMS, THE REINVESTMENT ASSUMPTION IN THE MIRR IS MORE REALISITIC THAN IN THE IRR NPV IS THE SINGLE BEST METHOD TO USE WHEN MAKING CAPITAL BUDGETING DECISIONS NOTE IRR FAILS WHEN MORE THAN ONE OUTFLOWS ARE INVOLVED IN CAPITAL BUDGETING DECISION IRR ASSUMES THAT MONEY IS REINVESTED AT IRR WHICH IS NOT REALISTIC . MIRR NpV IRR REPLACEMENT S / HPR GMAM , EAC MACRS RATIOCASHBUDGET acc BOND EPS EBIT- REPLACEMENTSTat - erences: JF8 福 130% 09:12 11-01-2019

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