1. There are several different methods making capital budgeting decisions. However, the single best method is:
a. Internal rate of return (IRR).
b. Netpresentvalue(NPV).
c. Discounted payback.
d. Modified internal rate of return (MIRR).
2. Dothan Inc.'s stock has a 25% chance of producing a 17% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return.
What is the firm's expected rate of return?
a. 5.81%
b. 5.75%
c. 6.27%
d. 4.43%
e. 4.72%