Ask Question, Ask an Expert

+61-413 786 465

[email protected]

Ask Basic Finance Expert

Finance


Home >> Basic Finance

Answer the question in True or False 

1. The goal of the capital budgeting decisions is to select capital projects that will decrease the value of the firm.
a. True
b. False

2. Capital budgeting decisions, once made, are not easy to reverse because of the huge investments involved.
a. True
b. False

3. The basis on which capital budgeting plans are made is a firm's three- to five-year strategic plan.
a. True
b. False

4. Most of the information required to make capital budgeting decisions are internally generated, beginning with the sales force.
a. True
b. False

5. All capital budgeting projects are independent projects.
a. True
b. False

6. When two projects have cash flows that are tied to each other, the projects may be classified as independent.
a. True
b. False

7. Projects are classified as independent when their cash flows are unrelated.
a. True
b. False

8. When two projects are independent, accepting one project implicitly eliminates the other.
a. True
b. False

9. When two projects are mutually exclusive, accepting one project implicitly eliminates the other.
a. True
b. False

10. Projects that are classified as contingent could be mandatory or optional projects.
a. True
b. False

11. All contingent projects are mandatory projects.
a. True
b. False

12. The cost of capital is the highest return a project can earn.
a. True
b. False

13. Capital rationing refers to the limiting of capital resources to underperforming divisions.
a. True
b. False


14. The net present value technique is an approach that goes against the goal of shareholder wealth maximization.
a. True
b. False

15. The NPV method determines how much the present value of cash inflows exceeds the present value of costs.
a. True
b. False

16. Accepting a positive-NPV project decreases shareholder wealth.
a. True
b. False

17. Accepting a positive-NPV project increases shareholder wealth.
a. True
b. False

18. Accepting a negative-NPV project increases shareholder wealth.
a. True
b. False

19. The discount rate used to determine the present value of future cash flows is called the cost of capital.
a. True
b. False

20. The payback method is called a discounted cash flow technique.
a. True
b. False


21. If the payback period for a project exceeds the firm's threshold period, then the project is accepted
a. True
b. False

22. The payback method is consistent with the goal of shareholder wealth maximization.
a. True
b. False

23. The discounted payback period calculation calls for the future cash flows to be discounted by the firm's cost of capital.
a. True
b. False

24. Unlike the regular payback method, the discounted payback method does not ignore cash flows beyond the firm's threshold period.
a. True
b. False

25. The accounting rate of return is not a true return because it simply utilizes some average figures from the firm's balance sheet and income statement.
a. True
b. False

26. The decision criterion for the accounting rate of return is consistent with the goal of shareholder wealth maximization.
a. True
b. False

27. The IRR and NPV decisions are consistent with each other when a project's cash flows follow a conventional pattern.
a. True
b. False

28. Unconventional cash flow patterns could lead to conflicting decisions by NPV and IRR.
a. True
b. False

29. When mutually exclusive projects are considered, both NPV and IRR will always produce the same acceptance decision.
a. True
b. False

30. When evaluating two projects that require different outlays, the IRR does not recognize the difference in the size of the investments.
a. True
b. False

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91894448

Have any Question?


Related Questions in Basic Finance

Question utilizing the concepts learned throughout the

Question: Utilizing the concepts learned throughout the course, write a Final Paper on one of the following scenarios: • Option One: You are a consultant with 10 years experience in the health care insurance industry. A ...

Discussion your initial discussion thread is due on day 3

Discussion: Your initial discussion thread is due on Day 3 (Thursday) and you have until Day 7 (Monday) to respond to your classmates. Your grade will reflect both the quality of your initial post and the depth of your r ...

Question financial ratios analysis and comparison

Question: Financial Ratios Analysis and Comparison Paper Prior to completing this assignment, review Chapter 10 and 12 in your course text. You are a mid-level manager in a health care organization and you have been aske ...

Grant technologies needs 300000 to pay its supplier grants

Grant Technologies needs $300,000 to pay its supplier. Grant's bank is offering a 210-day simple interest loan with a quoted interest rate of 11 percent and a 20 percent compensating balance requirement. Assuming there a ...

Franks is looking at a new sausage system with an installed

Franks is looking at a new sausage system with an installed cost of $375,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped ...

Market-value ratios garret industries has a priceearnings

(?Market-value ratios?) Garret Industries has a? price/earnings ratio of 19.46X a. If? Garret's earnings per share is ?$1.65?, what is the price per share of? Garret's stock? b. Using the price per share you found in par ...

You are planning to make annual deposits of 4440 into a

You are planning to make annual deposits of $4,440 into a retirement account that pays 9 percent interest compounded monthly. How large will your account balance be in 32 years?  (Do not round intermediate calculations a ...

One year ago you bought a put option on 125000 euros with

One year ago, you bought a put option on 125,000 euros with an expiration date of one year. You paid a premium on the put option of $.05 per unit. The exercise price was $1.36. Assume that one year ago, the spot rate of ...

Common stock versus warrant investment tom baldwin can

Common stock versus warrant investment Tom Baldwin can invest $6,300 in the common stock or the warrants of Lexington Life Insurance. The common stock is currently selling for $30 per share. Its warrants, which provide f ...

Call optionnbspcarol krebs is considering buying 100 shares

Call option  Carol Krebs is considering buying 100 shares of Sooner Products, Inc., at $62 per share. Because she has read that the firm will probably soon receive certain large orders from abroad, she expects the price ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved