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Which of the following is true while making a capital investment decision?
a. A manager should compute the competitor's return on investment.
b. A manager should assess the risk of the project.
c. A manager should ensure that the project cost is equal to the cash flow from investment.
d. A manager should ignore the timing of the cash flows.
e. All of these choices are correct.

Respuesta :

Answer:

b. A manager should assess the risk of the project.

Explanation:

While making a capital investment decision, a firm shall properly evaluate the capital investments , for this the manager shall access the following:

  • Required return on investment by the firm.
  • Risk associated with the project.
  • Cash flows arising from the investment.
  • Timing of the cash flows for discounting them into present value.
  • Cost associated with the project.

Therefore, correct option is :

b. A manager should assess the risk of the project.

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