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8. Conclusions about capital budgeting The decision process Before making capital budgeting decisions, finance professionals

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Answer #1

Option 1: Incorrect. MIRR and NPV does not use same reinvestment rate and they do not always lead to same conclusion.

Option 2: Correct

Option 3: Correct. Assumption of reinvestment rate for NPV is more realistic than IRR

NPV is the single best method to use when making capital budgeting decisions.

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