Choice "A" is correct. When using the net present value method of capital budgeting, different hurdle rates can be used for each year of the project.
Choice "d" is incorrect. The desired rate of return for capital projects is established by management.
Choice "b" is incorrect. The internal rate of return determines the discount rate that will equate the discounted cash inflows with the outflows, thus resulting in no gain or loss (breakeven).
Choice "c" is incorrect. Both the net present value method and the internal rate of return model are discounted cash flow methods.
