Which one of the following capital budgeting proposals is most apt to be associated with 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 favored by managers who prioritize short-term gains over long-term profitability, while shareholders may prefer the proposal with the highest NPV, even if it has a longer payback period. This can create a conflict of interests between managers and shareholders. The other options (A, B, and D) do not necessarily involve conflicting interests.

Which One of the Following Capital Budgeting Proposals Is Most