A reason that a small firm would not use a discounted cash flow technique in evaluating capital investments would be that
A) the accounting rate of return is better for a small firm.
B) liquidity is less of an issue for a small company.
C) small firms invest more in short-term assets than do large companies.
D) nonfinancial issues may be more important for a small firm.

Question

Quizplus · Accepted Answer

Nonfinancial issues, such as personal relationships or strategic goals, may be more important for small firms when making investment decisions compared to larger companies. Therefore, a discounted cash flow technique, which focuses solely on financial projections and cash flow, may not adequately capture these nonfinancial considerations for a small firm's decision-making process.

A Reason That a Small Firm Would Not Use a Discounted