Fill in each statement with the appropriate capital budgeting method: payback period, ARR, NPV, or IRR.

Fill in each statement with the appropriate capital budgeting  method: payback  period, ARR,  NPV, or IRR.

a.	Payback period	ignores salvage value after the payback period.
b.	IRR	uses discounted cash flows to determine the asset’s unique rate of return.

c.	Payback period	highlights risky investments.
d.	In capital rationing decisions, the profitability index must be computed to compare
	investments requiring different initial investments when the			NPV	method is used.

e.	IRR	and	NPV	incorporate the time value of money.
f.	Payback period	focuses on time, not profitability.

g.	ARR	uses accrual accounting income.
h.	ARR	measures profitability but ignores the time value of money.

i.

IRR

finds the discount rate that brings the investment’s NPV to zero.