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:
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All of the following influence capital budgeting cash flows EXCEPT:
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All of the following are widely used methods for evaluating capital expenditures except;
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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%.
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A project whose acceptance precludes the acceptance of one or more alternative projects is referred to as __________.
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The capital budgeting decision involves the planning of expenditures for projects with a life of at least:
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Which of the following statements is incorrect regarding a normal project?
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The estimated benefits from a project are expressed as cash flows instead of income flows because:
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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?
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A capital investment is one that
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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?
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A profitability index (PI) of .92 for a project means that __________.
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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)?
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The internal rate of return method:
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One of the main advantages of the payback period is:
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Under the payback period:
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In proper capital budgeting analysis we evaluate incremental
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A project whose acceptance does not prevent or require the acceptance of one or more alternative projects is referred to as __________.
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The basic discount rate used in net present value analysis is:
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