Appropriate discount rate to reflect risk of the strategy

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Reference no: EM131025759

Which of the following statements is correct?

A. Capital budgeting analysis is not a framework for evaluating all business decisions; it is only a tool for the “financial” types.

B. Proper analysis will identify irrelevant cash flows and an appropriate discount rate to reflect the risk of the strategy and will compare the benefits and costs of the project without considering the time value of money.

C. Whether the investment is one in a business strategy, building a new warehouse, seeking fuel efficient methods of doing business, upgrading information technology systems, or investing in human resources, we should not try to quantify the benefits and cost of these choices in order to evaluate them properly.

D. To achieve success over time, a firm’s managers must identify and invest in projects that provide positive net present values to maximize shareholder wealth.

Reference no: EM131025759

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