Chapter 26, Problem 17E

Fill in each statement with the appropriate capital investment analysis method: Payback, ARR, NPV, or IRR. Some statements may have more than one answer.

1. a. _____ is(are) more appropriate for long-term investments.
2. b. _____ highlights risky investments.
3. c. _____ shows the effect of the investment on the company’s accrual-based income.
4. d. _____ is the interest rate that makes the NPV of an investment equal to zero.
5. e. _____ requires management to identify the discount rate when used.
6. f. _____ provides management with information on how fast the cash invested will be recouped.
7. g. _____ is the rate of return, using discounted cash flows, a company can expect to earn by investing in the asset.
8. h. _____ does not consider the asset’s profitability.
9. i. _____ uses accrual accounting rather than net cash inflows in its computation.