Multiple ChoiceQuestions1. The capital budgeting decision depends in part on thea) Availability of funds.b) Relationships among proposed projects.c) Risk associated with a particular project.d) All of these. Show
2. Which of the following is not a typical cash flow related toequipment purchase and replacement decisions? Get answer to your question and much more 3. An asset costs $210,000 with a $30,000 salvage value at theend of its ten-year life. If annual cash inflows are $30,000, thecash payback period is Get answer to your question and much more 4. B Company is considering the purchase of a piece ofequipment that costs $23,000. Projected net annual cash flowsover the project’s life are: Year Net Annual Cash Flow 1 $3,0002 8,000 3 15,000 4 9,000 The cash payback period is: Get answer to your question and much more Revised Spring 2018 Chapter 12 Review Questions Multiple Choice Questions The capital budgeting decision depends in part on the a) Availability of funds. b) Relationships among proposed projects. c) Risk associated with a particular project. Which of the following is not a typical cash flow related to equipment purchase and replacement decisions? a) Increased operating costs c) Salvage value of equipment when project is complete An asset costs $210,000 with a $30,000 salvage value at the end of its ten-year life. If annual cash inflows are $30,000, the cash payback period is B Company is considering the purchase of a piece of equipment that costs $23,000. Projected net annual cash flows over the project’s life are: The cash payback period is: If a company's required rate of return is 10% and, in using the net present value method, a project's net present value is zero, this indicates that the a) Project's rate of return exceeds 10%. b) Project's rate of return is less than the minimum rate required. c) Project earns a rate of return of 10%. d) Project earns a rate of return of 0%. When a capital budgeting project generates a positive net present value, this About Us McqMate.com is an educational platform, Which is developed BY STUDENTS, FOR STUDENTS, The only objective of our platform is to assist fellow students in preparing for exams and in their Studies throughout their Academic career. what we offer ?» We provide you study material i.e. PDF's for offline use. Sloan Inc. recently invested in a project with a 3-year life span. The net present value was $9,000 and annual cash inflows were $21,000 for year 1; $24,000 for year 2; and $27,000 for year 3. The initial investment for the project, assuming a 15% required rate of return, was Selma Inc. is comparing several alternative capital budgeting projects as shown below: Using the profitability index, the projects rank as Carr Company is considering two capital investment
proposals. Estimates regarding each project are provided below: The company requires a 10% rate of return on all new investments. The net present value
for Project Nuts is Sets with similar termsWhich of the following is not the typical cash flow related to equipment purchase and replacement decision?Depreciation expense
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Which of the following is not true for capital budgeting?It does not include sunk costs.
Which of the following is a disadvantage of the cash payback technique?Answer: D. It ignores the expected profitability of a project. A disadvantage of the cash payback technique is that it ignores the expected profitability of a project.
Which of the following methods of evaluating capital investments utilizes present value techniques?Answer and Explanation: The correct answer is option a. Internal rate of return. In capital budgeting, computing the internal rate of return in evaluating capital investment proposals uses the present value concept.
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