Capital Budgeting Techniques
Check your learning of Capital budgeting concepts, techniques, calculations, and Excel functions.

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Under the net present value method:
1 point
All of the following influence capital budgeting cash flows EXCEPT:
1 point
All of the following are widely used methods for evaluating capital expenditures except;
1 point
To the nearest dollar, what is the net present value of a replacement project whose cash flows are -\$104,000; \$34,444; \$39,877; \$25,000; and \$52,800 for years 0 through 4, respectively? The firm has decided to assume that the appropriate cost of capital is 10% and the appropriate risk-free rate is 6%.
5 points
A project whose acceptance precludes the acceptance of one or more alternative projects is referred to as __________.
1 point
The capital budgeting decision involves the planning of expenditures for projects with a life of at least:
1 point
Which of the following statements is incorrect regarding a normal project?
1 point
The estimated benefits from a project are expressed as cash flows instead of income flows because:
1 point
Bulging Stomach Restaurants, Inc., has estimated that a proposed project's 8-year net cash benefit will be \$4,000 per year for years 1 through 8, with an additional terminal benefit of \$8,000 at the end of the eighth year. Assuming that these cash inflows satisfy exactly Bulging's required rate of return of 8 percent, the project's initial cash outflow is closest to which of the following four possible answers?
5 points
A capital investment is one that
1 point
The LMN Corporation is considering an investment that will cost \$80,000 and have a useful life of 4 years. During the first 2 years, the net incremental after-tax cash flows are \$25,000 per year and for the last two years they are \$20,000 per year. What is the payback period for this investment?
2 points
A profitability index (PI) of .92 for a project means that __________.
1 point
A project has the following cash inflows \$34,444; \$39,877; \$25,000; and \$52,800 for years 1 through 4, respectively. The initial cash outflow is \$104,000. Which of the following four statements is correct concerning the project internal rate of return (IRR)?
5 points
The internal rate of return method:
1 point
One of the main advantages of the payback period is:
1 point
Under the payback period:
1 point
In proper capital budgeting analysis we evaluate incremental
1 point
A project whose acceptance does not prevent or require the acceptance of one or more alternative projects is referred to as __________.
1 point
The basic discount rate used in net present value analysis is:
1 point