1. Which of the following can create ethical dilemmas between corporate managers and stockholders?

a) Agency relationship

b) Auditors

c) Boards of directors

d) Venture capitalist

2. Which of the following statements about capital budgeting methodology are true?

(1) Projects with a net present value greater than or equal to zero are generally considered acceptable

(2) Projects with an internal rate of return greater than the risk-free rate are generally considered acceptable

(3) Projects with a profitability index greater than or equal to one are generally considered acceptable

(4) Projects with a payback period less than 10 years are generally considered acceptable

a. 1 and 3

b. 1, 2, 3 and 4

c. 1, 2 and 3

d. 1 and 2