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13 January, 06:44

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.

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Answers (1)
  1. 13 January, 07:13
    0
    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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