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According to the Gitman and Forrester study published in 1977, the two most commonly used capital budgeting techniques are:?

a. net present value and profitability index. 

 b. internal rate of return and payback period. 

 c. net present value and average rate of return. 

 d. profitability index and average rate of return. 

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Question added by Emad Mohammed said abdalla , ERP & IT Software, operation general manager . , AL DOHA Company
Date Posted: 2015/08/05
amjad ali
by amjad ali , Senior Electrical Engineer , SNC Lavalin Fayez Engineering

Option C is the correct one i.e net present value and average rate of return.

patrick mashawa
by patrick mashawa , Technical Trainer , SIS Integrated Solutions

net present value and average rate of return

Emad Mohammed said abdalla
by Emad Mohammed said abdalla , ERP & IT Software, operation general manager . , AL DOHA Company

  1. The correct answer was: b. internal rate of return and payback period.

Yaqoub Alomar
by Yaqoub Alomar , Civil Engineer , Al-Zubeir municipality

Thanks for the invitation,

I agree with the experts 

Ismael Hamad
by Ismael Hamad , Trainer , ANTONOIL DMCC , Lukoil project, WQ2

.....................c. net present value and average rate of return.............................

Salvatore Augello
by Salvatore Augello , owner , A.S. Trade & Consult

answser B ________________________________________________________

khaled elkholy
by khaled elkholy , HR MANAGER , misk for import & export

 b. internal rate of return and payback period.l.................................................

Gayasuddin Mohammed
by Gayasuddin Mohammed , Advocate , Practicing Law before High Court at Hyderabad

Option (B)- internal rate of return and payback period. is the correct answer.

IRR is the primary and payback period is the secondary approach.

According to the notes available and pasted herein below:

Laurence G. Gitman and John R. Forrester Jr. analyzed the responses from110 firms who replied to their survey of the600 companies that Forbes reported as having the greatest stock price growth over the periods. The survey containing questions concerning capital budgeting techniques, the division of responsibility for capital budgeting decisions, the most important and most difficult stages of capital budgeting, the cutoff rate and the methods used to assess risk. They found that the discounted cash flow techniques were the most popular methods for evaluating projects, especially the internal rate of return. However, many firms still used the payback method as a backup or secondary approach.

 

Deleted user
by Deleted user

c. net present value and average rate of return ...................................................

Jawad Ali Ali
by Jawad Ali Ali , Accounts Officer , Educational Excellence Limited

Answer is02 is correct as per rule 

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