1. What is capital budgeting? Discuss the five stages in the capital budgeting process.

2. Suppose a toy manufacturer is faced with the following collection of investment projects:

(a) Opening a retail outlet

(b) Introducing a new line of dolls

(c) Introducing a new action figure in an existing line of action figures

(d) Adding another packaging line to the production process

(e) Adding pollution control equipment to avoid environmental fines

(f) ) Computerizing the doll-molding equipment

(g) Introducing a child’s version of an existing adult board game

Classify each project into one of the four categories: Expansion (E), Replacement (R), New product or market (N), or Mandated (M).

3. Match Stakeholders to their goal:   

___Managers   ???

___Creditors? ???

___Customers? ???

___Employees? ???

___Suppliers ????

___Owners ???

A) Job security

B) Low risk, return of their money and interest

C) High prices

D) High Salary

E) Dividends or stock appreciation

F) Low prices?