Screening and Preference Decisions sub-objective

Choosing among alternative capital investments requires an organization to consider various aspects of the alternative investments. The following statements relate to screening and preference decisions that may arise as an organization considers various investments.

a. A screening decision is the same as a preference decision.
b. NPV and IRR can be used as screening tools.
c. NPV should never be used to compare a capital investments,unless the investments are of different magnitudes.
d. The profitability index is a modification of the NPV and can be used to compare investments of different magnitudes.
e. A preference decision involves deciding whether an investment exceeds an organization's miimum requried return.

Required:

Indicated whether each of the preceding statements is true or false.

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