Question

Companies often use several methods to evaluate the project's cash flows and each of them has its benefits and disadvantages. Please select which of the following conclusions about capital budgeting are valid?

1. Managers have been slow to adopt the IRR, because percentage returns are a harder concept for them to grasp
2. For most firms, the reinvestment rate assumption in the NPV is more realistic than the assumption in the IRR.
3. The discounted payback period improves on the regular payback period by accounting for the time value of money
True or false: Sophisticated firms use only the NPV method in capital budgeting decisions

Answer 1

The answer and procedures of the exercise are attached in a microsoft excel document.

Explanation

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.