What question did this study set out to answer?

The study aims to assess how simplified capital budgeting models perform when considering time-state preferences and risk classifications.

Evaluating Simplified Capital Budgeting Models Using a Time-state Preference Metric.

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This article evaluates capital budgeting models that prioritize net present value and risk classes, indicating areas for decision-making improvement.

The study aims to assess how simplified capital budgeting models perform when considering time-state preferences and risk classifications.
Utilized a time-state preference simulation model
Examined the effects of combining net present value with payback constraints
Assigned projects to different risk classes with varying discount rates
Combining net present value and payback constraints showed little synergistic effect
Model performance can be significantly improved by classifying projects into two or three risk categories
The NPV model's effectiveness is maintained when different discount rates are applied to distinct risk classes

Gary L. Sundem (1974) studied this question.

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This article evaluates capital budgeting models that prioritize net present value and risk classes, indicating areas for decision-making improvement.