Read Online (Free) relies on page scans, which are not currently available to screen readers. To access this article, please contact JSTOR User Support . We'll provide a PDF copy for your screen reader.
With a personal account, you can read up to 100 articles each month for free.
Get StartedAlready have an account? Log in
Monthly Plan
- Access everything in the JPASS collection
- Read the full-text of every article
- Download up to 10 article PDFs to save and keep
Yearly Plan
- Access everything in the JPASS collection
- Read the full-text of every article
- Download up to 120 article PDFs to save and keep
Log in through your institution
Purchase a PDF
Purchase this article for $14.00 USD.
How does it work?
- Select the purchase option.
- Check out using a credit card or bank account with PayPal.
- Read your article online and download the PDF from your email or your account.
journal article
A Note on the Arithmetic of Capital Budgeting DecisionsThe Journal of Business
Vol. 30, No. 3 (Jul., 1957)
, pp. 193-201 (9 pages)
Published By: The University of Chicago Press
//www.jstor.org/stable/2350725
Read and download
Log in through your school or library
Alternate access options
For independent researchers
Read Online
Read 100 articles/month free
Subscribe to JPASS
Unlimited reading + 10 downloads
Purchase article
$14.00 - Download now and later
Journal Information
The Journal of Business ceased publication with the November 2006 issue (Volume 79, Number 6). Founded in 1928, The Journal of Business was the first scholarly journal to focus on business-related research and played a pioneering role in fostering serious academic research about business. However, in appreciation of the increasing specialization in business scholarship, as reflected in the emergence of many specialized business journals, the faculty of the University of Chicago's Graduate School of Business decided after careful deliberation and extensive dialogue to cease publication of the more broadly focused Journal at the end of 2006, after nearly eight decades of publication by the University of Chicago Press.
Publisher Information
Since its origins in 1890 as one of the three main divisions of the University of Chicago, The University of Chicago Press has embraced as its mission the obligation to disseminate scholarship of the highest standard and to publish serious works that promote education, foster public understanding, and enrich cultural life. Today, the Journals Division publishes more than 70 journals and hardcover serials, in a wide range of academic disciplines, including the social sciences, the humanities, education, the biological and medical sciences, and the physical sciences.
Rights & Usage
This item is part of a JSTOR Collection.
For terms and use, please refer to our Terms and Conditions
The Journal of Business © 1957 The University of Chicago Press
Request Permissions
MODULE 9
CAPITAL BUDGETING
THEORIES:
Basic Concepts
Decision Making Process
2.The first step in the decision-making process isto
A.determine and evaluate possible courses of action.
B.identify the problem and assign responsibility.
C.make a decision.
D.review results of the decision.
Strategic planning
39. Strategic planning is the process of decidingon an organization’
A.minor programs and the approximate resources tobe devoted to them
B.major programs and the approximate resources tobe devoted to them
C.minor programs prior to consideration of resourcesthat might be needed
D.major programs prior to consideration of resourcesthat might be needed
Capital budgeting defined
1.Thelong-termplanningprocessformakingandfinancinginvestmentsthataffectacompany’s
financial results over a number of years is referredto as
A.capital budgetingC.master budgeting
B. strategic planningD.long-range planning
3.Capital budgeting is the process
A.used in sell or process further decisions.
B.of determining how much capital stock to issue
C.of making capital expenditure decisions
D.of eliminating unprofitable product line
5.A capital investment decision is essentially adecision to:
A. exchange current assets for current liabilities.
B.exchange current cash outflows for the promiseof receiving future cash inflows.
C.exchangecurrentcashflowfromoperatingactivitiesforfuturecashinflowsfrominvesting
activities.
D.exchange current cash inflows for future cash outflows.
Risk & return
6.The higher the risk element in a project, the
A.more attractive the investment is.
B.higher the net present value is.
C.higher the cost of capital is.
D.higher the discount rate is.
9.Cost of capital is the
A.amount the company must pay for its plant assets.
B.dividends a company must pay on its equity securities.
C.cost the company must incur to obtain its capitalresources.
D.costthecompanyischargedbyinvestmentbankerswhohandletheissuanceofequityor
long-term debt securities.
14.How should the following projects be listed inorder of increasing risk?
A.New venture, replacement, expansion.
B.Replacement, new venture, expansion.
C.Replacement, expansion, new venture.
D.Expansion, replacement, new venture.
41.Problemsassociatedwithjustifyinginvestmentsinhigh-techprojectsofteninclude discount
rates that are too
A.low and time horizons that are too long
B.high and time horizons that are too long
C.high and time horizons that are too short
D.low and time horizons that are too short
60.In evaluating high-tech projects,
A.only tangible benefits should be considered.
B.only intangible benefits should be considered.
C. both tangible and intangible benefits should beconsidered.
D.neither tangible nor intangible benefits shouldbe considered.
Types of capital projects
4.A project that when accepted or rejected will notaffect the cash flows of another project.