Question

According to graham and harvey's 1999 survey of 392 cfos, which of the following two capital budgeting methods are most used by firms in the united states?

O accounting rate of return
O payback method
O net present value
O internal rate of return
O profitability index

Answer 1

The two most popular capital budgeting methods used by firms in the U.S., according to a survey by Graham and Harvey, are Net Present Value (NPV) and Internal Rate of Return (IRR).

Step-by-step explanation:

According to Graham and Harvey's 1999 survey of 392 CFOs, the two capital budgeting methods that are most used by firms in the United States are the Net Present Value (NPV) and the Internal Rate of Return (IRR). The NPV method is utilized to evaluate the profitability of an investment by calculating the present value of expected future cash flows and subtracting the initial investment cost. On the other hand, the IRR is a metric used to estimate the profitability of potential investments by identifying the interest rate at which the present value of future cash flows equals the initial investment, meaning the NPV is zero.

According to Graham and Harvey's 1999 survey of 392 CFOs, the two most used capital budgeting methods by firms in the United States are net present value (NPV) and internal rate of return (IRR).