Which of the following capital budgeting techniques is most favored by CFOs?
A)payback period
B)internal rate of return
C)profitability index
D)P/E ratios

Question

Quizplus · Accepted Answer

CFOs most favor the internal rate of return (IRR) capital budgeting technique because it considers the time value of money and provides a measure of the project's overall profitability. The payback period, profitability index, and P/E ratios are also used, but not as frequently as IRR. Internal rate of return (IRR) is generally favored by CFOs as it takes into account the time value of money and provides a percentage rate of return on the investment. This helps in comparing and selecting among different investment options. Payback period and profitability index are less favored as they do not consider the time value of money and P/E ratios are not a capital budgeting technique.

Which of the Following Capital Budgeting Techniques Is Most Favored