26.The capital budget plan for the year is approved by a company"sa.board the directors.b.capital budgeting committee.c.officers.d.shareholders


27.Which that the following explains the resources budgeting testimonial process?a.The capital spending plan committee submits its proposals to the police officers of the firm who choose which jobs will it is in forwarded come the shareholders for ultimate approval.b.The officiers that the firm submit your proposals to the capital spending plan committee who select which projects will be forwarded to the shareholders for ultimate approval.c.The officiers that the company submit their proposals come the capital budget plan committee who select which projects will it is in forwarded to the plank of directors because that ultimate approval.d.The capital budget plan committee submits that proposal come the officers of the agency who select which projects will be forwarded to the board of directors for ultimate approval.

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28.Which of the following represents a cash inflow?a.the initial investmentb.sale of old equipmentc.repairs and maintenanced.increased operation costs


29.Which that the complying with represents a cash outflow?a.overhaul the equipmentb.increased cash obtained from customersc.reduced cash operation for operating costsd.salvage worth of tools when job is completed


30.The resources budgeting decision counts in part on thea.availability the funds.b.relationships among proposed projects.c.risk linked with a particular project.d.all that these.


31.Capital budgeting is the processa.used in sell or procedure further decisions.b.of determining exactly how many common shares come issue.c.of making capital expenditure decisions.d.of remove unprofitable product lines.


32.If an asset costs $60,000 and also is intended to have actually a $5,000 salvage worth at the finish of the nine-year life, and also generates annual net cash inflows that $10,000 each year, the cash payback period isa.6.5 years.b.6 years.c.5.5 years.d.9 years.


33.If a payback duration for a project is greater than that is expected helpful life, thea.project will constantly be profitable.b.entire early investment will certainly not be recovered.c.project would only be agree if the company"s price of resources was low.d.project"s return will constantly exceed the company"s price of capital.


34.The cash payback techniquea.should be used as a final screening tool.b.can it is in the only basis because that the resources budgeting decision.c.is relatively easy to calculate and understand.d.considers the supposed profitability that a project.


35.The cash payback period is calculation by splitting the cost of the resources investment through thea.annual network income.b.net yearly cash inflow.c.present value of the cash inflow.d.present value of the network income.


36.When utilizing the cash payback technique, the payback period is expressed in state ofa.a percent.b.dollars.c.years.d.months.


37.A disadvantage the the cash payback method is that ita.ignores obsolescence factors.b.ignores the expense of an investment.c.is complicated to use.d.ignores the moment value of money.


38.Bark agency is considering purchase a an equipment for $120,000 with an estimated life the ten years and also no rescue value. The straight-line method of depreciation will be used. The an equipment is supposed to generate net earnings of $8,000 every year. The cash payback period on this invest isa.15 years.b.10 years.c.6 years.d.3 years.


39.The discount price is described by all of the following alternative names other than thea.cost that capital.b.cutoff rate.c.hurdle rate.d.required rate of return.


40.The rate that a company must salary to attain funds native creditors and shareholders s recognized as thea.hurdle rate.b.cost the capital.c.cutoff rate.d.all the these.


41.The higher the risk aspect in a project, thea.more attractive the investment.b.higher the net present value.c.higher the cost of capital.d.higher the discount rate


42.If a company"s compelled rate that return is 10% and, in making use of the net present value method, a project"s net existing value is zero, this shows that thea.project"s price of return over 10%.b.project"s price of return is much less than the minimum price required.c.project earns a price of return that 10%.d.project earns a rate of return of 0%.


43.Using the profitability index method, the existing value the cash inflows for project Flower is $88,000 and the present value that cash inflows of task Plant is $48,000. If job Flower and Project Plant require initial investments of $90,000 and $40,000, respectively, and also have the same beneficial life, the job that have to be embraced isa.Project Flower.b.Project Plant.c.Either project may be accepted.d.Neither project need to be accepted


44.Which of the following assumptions is do in order to leveling the net present value method?a.All cash flows come at the end of the year.b.All cash operation are automatically reinvested in ~ the ideal rate easily accessible at the time.c.All cash flows come in ~ the beginning of the year.d.All cash flows are not reinvested.


45.When the yearly cash flows from one investment room unequal, the proper table to use is thea.future worth of 1 table.b.future value of annuity table.c.present value of 1 table.d.present value of annuity table.


46.If a agency uses a 12% discount price with the net existing value method, and then does the same analysis, but with a 15% discount rate, which of the following is most likely to occur?a.The 12% price will show the job is more rewarding than the 15% rate.b.The 15% rate will show the task is more profitable than the 12% rate.c.Both prices will create the exact same net existing value.d.The relative profitability the the two research studies depends only on the timing of the cash flows, not on the discount rate.


47.Intangible services in funding budgeting would include all of the following other than increaseda.product quality.b.employee loyalty.c.salvage value.d.product safety.


48.Intangible benefits in capital budgetinga.should it is in ignored since they are an overwhelming to determine.b.include raised quality or employee loyalty.c.are not considered due to the fact that they room usually not relevant to the decision.d.have a rate of return in overabundance of the company’s cost of capital.


49.To prevent rejecting projects that actually should be accepted,1.intangible benefits should be ignored.2.conservative estimates of the intangible benefits" value have to be included into the NPV calculation.3.calculate net existing value skipping intangible benefits and also then, if the NPV is negative, estimate whether the intangible benefits are worth at least the quantity of the negative NPV.a.1b.2c.3d.both 2 and also 3 space correct.


50.All that the following statements around intangible benefits in resources budgeting are correct other than that theya.include increased quality and also employee loyalty.b.are difficult to quantify.c.are regularly ignored in capital budgeting decisions.d.cannot be included into the NPV calculation


51.In evaluating high-tech projectsa.only tangible benefits have to be considered.b.only intangible benefits must be considered.c.both tangible and also intangible benefits should be considered.d.neither tangible nor intangible benefits have to be considered.


52.Using a number of outcome approximates to acquire a feeling of the variability amongst potential return isa.financial analysis.b.post-audit analysis.c.sensitivity analysis.d.outcome analysis.


53.If a company"s required rate the return is 9%, and in utilizing the profitability table of contents method, a project"s index is better than 1, this indicates that the project"s rate of return isa.equal come 9%.b.greater 보다 9%.c.less than 9%.d.unacceptable for investment purposes.


54.The profitability index is calculate by dividing thea.total cash flows by the initial investment.b.present value of cash operation by the early investment.c.initial investment by the total cash flows.d.initial invest by the existing value that cash flows.

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55.The resources budgeting method that takes right into account both the size of the initial investment and the discounted cash operation is thea.cash payback method.b.internal price of return method.c.net current value method.d.profitability index.