Discuss two drawbacks of utilizing the weighted average cost of capital to make investment choices when making capital allocation decisions

Describe the most important capital budgeting techniques and how they are used to arrive at investment decisions

What will be Measures of Investment Performance Using Ratios?

We learn there are three primary methods used to analyze capital investment proposals.   Please compare and contrast these three methods.   Be sure to include strengths (benefits) and weaknesses (drawbacks) of each.   Three primary methods are: Payback method Internal rate of return Net present value.

Briefly explain capital allocation line (CAL) and security market line(SML)

The weighted average cost of capital is used to determine whether or not a project should be done.   true false

Which of the following can be used to place capital investment proposals involving different amounts of investment on a comparable basis for purposes of net present value analysis? a. future value index b. price-level index c. rate of investment index d. present value index

Discuss the advantages and disadvantages of using the Internal Rate of Return method for analyzing capital investment projects.

What two variables affecting capital budgeting would you consider the most when making investment decisions?

Define the term, the return on invested capital (RIC)?