Question1: Some firms use the payback period as a decision criterion or as a supplement to sophisticated decision techniques because
[A] The determination of payback is an objectively determined criteria
[B] It can take the place of the net present value approach
[C] It can be viewed as a measure of risk exposure
[D] It explicitly considers the time value of money
Question2: The _____ is the discount rate that equates the present value of the cash inflows with the initial investment
[A] a payback period
[B] average rate of return
[C] cost of capital
[D] internal rate of return
Question3: The average of using simulation in the capital budgeting process is
[A] Dependability of predetermined probability distributions
[B] That it generates a continuum of risk-return tradeoffs rather than a single point estimate
[C] Ease of calculation
[D] The availability of a continuum of risk-return trade-offs which may be used as the basis for decision making