Sophisticated capital budgeting techniques do not
A) take into account an unconventional cash flow pattern.
B) examine the size of the initial outlay.
C) use net profits as a measure of return.
D) explicitly consider the time value of money.

Question

Quizplus · Accepted Answer

Sophisticated capital budgeting techniques do not use net profits as a measure of return. Instead, they use measures like net present value (NPV), internal rate of return (IRR), or profitability index (PI), which take into account the time value of money and the unconventional cash flow pattern, among other factors. The size of the initial outlay is also considered in these techniques.

Sophisticated Capital Budgeting Techniques Do Not