Which of the following capital budgeting proposals is most likely to display a conflict of interests?
A) The proposal with the highest NPV
B) The proposal with the longest payback period
C) The proposal with the highest IRR and quickest payback
D) The proposal to solve pollution problems cited by the EPA

Question

Quizplus · Accepted Answer

The proposal with the highest IRR and quickest payback may be preferred by managers who want to demonstrate faster results and higher returns in the short term, while the proposal with the highest NPV may be more beneficial for the company in the long run, leading to a potential conflict of interests. The other options do not directly create a conflict of interests. The proposal to solve pollution problems cited by the EPA may have social and environmental benefits that align with the company's values and objectives.

Which of the Following Capital Budgeting Proposals Is Most Likely