5.Even though the payback method ignores time value of money, many firms continue to use it when evaluating projects. Why might this practice be in the manager’s best interest?

6.List and discuss two advantages and two disadvantages of the accounting rate of return method.

7.Under the internal rate of return method, how would you decide which projects to accept and which projects to reject? Explain.

8.Is it always advisable to accept projects with the highest (positive) NPVs? IRRs? Why or why not?



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