Although the three capital budgeting methods are equivalent, they all can have difficulties making computation impossible at times.The most useful methods or tools from a practical standpoint are:

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The WACC method is useful because it takes into account the risk and the target debt to value ratios, which are important factors in the decision-making process. The Flow-to-equity method is also useful because it considers the optimal debt to equity ratios which is how managers typically think. These two methods provide a more comprehensive approach in evaluating investment opportunities compared to APV method, which is limited by the unknown debt levels in future years. Therefore, the best choice is E, Both B and C.

Although the Three Capital Budgeting Methods Are Equivalent, They All