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QUESTION
GCC uses the following criteria to make capital investment decisions:
GCC uses the following criteria to make capital investment decisions:
Effect on earnings per share (must be positive)
Payback period (must be less than six years)
Internal rate of return (must be less than 12 %)
Net Present Value (must be positive at a 12% discount rate)
- What are the advantages and disadvantages of each of these measures?
- Why do you think GCC uses all these measures rather than just one of them?
