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Homework answers / question archive / 1)Select one advantage of IRR as a capital budget method
1)Select one advantage of IRR as a capital budget method.
2)What is one disadvantage of NPV as a capital budget method?
3)Although __________ is recorded as an expense on the cash flow statement, it is not included as part of cash flow in the capital budgeting process.
4)Which of the following is an example of an operational risk for a company that manufactures automobiles?
Answer:
Q1. Choice (d) is correct.
Q2. Choice (c) is correct
Q3. Choice (d) is correct
Q4. Choice (d) is correct
Step-by-step explanation
Q1. Choice (d) is correct. (It is relatively simple and easily comprehensible.)
Q2. Choice (c) is correct. (It is not very good at accounting for opportunity cost.)
Q3. Choice (d) is correct. (a sunk cost)
Q4. Choice (d) is correct. (Disruption to the supply chain of material, due to domestic unrest in the source country)