Considerthe following statements about capital budgeting.a

Considerthe following statements about capital budgeting.a. _______ is (are) moreappropriate for long-term investments.b. _______ highlights riskyinvestments.c. _______ shows the effect ofthe investment on the company’s accrual-based income.d. _______ is the interest ratethat makes the NPV of an investment equal to zero.e. In capital rationingdecisions management must identify the discount rate when the _______ methodis used.f. _______ provides managementwith information on how fast the cash invested will be recouped.g. _______ is the rate ofreturn using discounted cash flows a company can expect to earn byinvesting in the asset.h. _______ does not considerthe asset’s profitability.i. _______ uses accrualaccounting rather than net cash inflows in its computation.Requirement:1. Fill in each statement withthe appropriate capital budgeting method: Payback period ROR NPV or IRR.Water Planet is considering purchasing a water park in AtlantaGeorgia for $1870000. The new facility will generate annual net cashinflows of $460000 for eight years. Engineers estimate that the facilitywill remain useful for eight years and have no residual value. The companyuses straight-line depreciation and its stockholders demand an annual returnof 10% on investments of this nature.Requirements:1. Compute the payback periodthe ROR the NPV the IRR and the profitability index of this investment.2. Recommend whether thecompany should invest in this project.

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