Question 1

If the internal rate of return (IRR)is greater than the required rate,the project is deemed ___________.

Accepted Answer

The answer of If the internal rate of return (IRR)is...

Question 2

In general terms,a sound capital investment will earn

Accepted Answer

A) back its original capital outlay. 
B) a return greater than existing capital investments. 
C) back its original capital outlay and provide a reasonable return on the original investment. 
D) back its original capital outlay by the midpoint of its useful life. 
E) none of these. 
A) back its original capital outlay. 
B) a return greater than existing capital investments. 
C) back its original capital outlay and provide a reasonable return on the original investment. 
D) back its original capital outlay by the midpoint of its useful life. 
E) none of these.

Question 3

If the internal rate of return (IRR)is less than the required rate of return,the project is __________.

Accepted Answer

The answer of If the internal rate of return (IRR)is...

Question 4

Name two nondiscounting capital investment models.What is meant by nondiscounting?

Accepted Answer

Two commonly used nondiscounting models

Question 5

When choosing among competing alternatives the ________________ model may choose an inferior project.
or
or

Accepted Answer

internal r

Question 6

What is a capital investment decision? Give an example.

Accepted Answer

A capital investment decision is one tha

Question 7

Figure 14-1. A company is considering two projects.
  Refer to Figure 14-1.What is the payback period for Project II?

Accepted Answer

A) 1 year 
B) 2 years 
C) 3.5 years 
D) 4 years 
E) 5 years 
A) 1 year 
B) 2 years 
C) 3.5 years 
D) 4 years 
E) 5 years

Question 8

Figure 14-3. Davis Company is considering the purchase of a new piece of equipment that will cost $1,600,000 and have a life of five years with no expected salvage value.The expected cash flows associated with the project are as follows:
  Refer to Figure 14-3.What is the accounting rate of return for the project?

Accepted Answer

A) 83.33% 
B) 31.25% 
C) 47.00% 
D) 37.50% 
E) 43.75% 
A) 83.33% 
B) 31.25% 
C) 47.00% 
D) 37.50% 
E) 43.75%

Question 9

The _________________________ measures the return on a project in terms of income.
or
or

Accepted Answer

accounting

Question 10

Which of the following is true of capital investment decision making?

Accepted Answer

A) It is used only for independent projects. 
B) It is used only for mutually exclusive projects. 
C) It requires that funding for a project must come from sources with the same opportunity cost of funds. 
D) It is used to determine whether or not a firm should accept a special order. 
E) None of these. 
A) It is used only for independent projects. 
B) It is used only for mutually exclusive projects. 
C) It requires that funding for a project must come from sources with the same opportunity cost of funds. 
D) It is used to determine whether or not a firm should accept a special order. 
E) None of these.

Question 11

Barker Production Company is considering the purchase of a flexible manufacturing system.The annual cash benefits/savings associated with the system are:
   The system will cost $750,000 and will last ten years.The company's cost of capital is 10 percent.
Required:

Accepted Answer

The answer of Barker Production Company is considering the purchase...

Question 12

The payback period provides information to managers that can be used to help

Accepted Answer

A) control the risks associated with the uncertainty of future cash flows. 
B) minimize the impact of an investment on a firm's liquidity problems. 
C) control the risk of obsolescence. 
D) control the effect of the investment on performance measures. 
E) all of these. 
A) control the risks associated with the uncertainty of future cash flows. 
B) minimize the impact of an investment on a firm's liquidity problems. 
C) control the risk of obsolescence. 
D) control the effect of the investment on performance measures. 
E) all of these.

Question 13

Shoring Company is considering a project with an internal rate of return of 14.5 percent.Shoring requires a minimum rate of return of 12 percent.The net present value of the project is

Accepted Answer

A) negative. 
B) infinite. 
C) equal to zero. 
D) positive. 
E) none of these. 
A) negative. 
B) infinite. 
C) equal to zero. 
D) positive. 
E) none of these.

Question 14

The required rate of return used in the net present value model can also be called the

Accepted Answer

A) hurdle rate. 
B) minimum acceptable rate of return. 
C) cost of capital. 
D) discount rate. 
E) all of these. 
A) hurdle rate. 
B) minimum acceptable rate of return. 
C) cost of capital. 
D) discount rate. 
E) all of these.

Question 15

A follow-up analysis of a capital investment after it is implemented is called a

Accepted Answer

A) capital investment review. 
B) profitability analysis. 
C) postaudit. 
D) peer review. 
A) capital investment review. 
B) profitability analysis. 
C) postaudit. 
D) peer review.

Question 16

Which of the following is true regarding the measurement and use of indirect and intangible benefits in capital investment decision making?

Accepted Answer

A) ABC has made identifying indirect benefits easier. 
B) Intangible benefits cannot be measured. 
C) Indirect and intangible benefits should not be considered,only direct costs and benefits are considered. 
D) Actions by competitors are not considered. 
E) None of these 
A) ABC has made identifying indirect benefits easier. 
B) Intangible benefits cannot be measured. 
C) Indirect and intangible benefits should not be considered,only direct costs and benefits are considered. 
D) Actions by competitors are not considered. 
E) None of these

Question 17

The capital investment decision making model that assumes that each cash inflow is reinvested at the project's own rate of return is

Accepted Answer

A) net present value. 
B) accounting rate of return. 
C) payback period. 
D) internal rate of return. 
E) none of these. 
A) net present value. 
B) accounting rate of return. 
C) payback period. 
D) internal rate of return. 
E) none of these.

Question 18

Elizabeth Myers invested in a project that required an initial amount of $1,560,and returned one cash inflow of $12,000 at the end of the 18th year.A partial table of the present value of an annuity of $1 in arrears is as follows:   What is the internal rate of return for this investment?

Accepted Answer

A) 8% 
B) 10% 
C) 12% 
D) 14% 
E) 16% 
A) 8% 
B) 10% 
C) 12% 
D) 14% 
E) 16%

Question 19

Elena Wallace invested $150,000 in a project that pays her an even amount per year for 10 years.The payback period is 6 years.What are Elena's yearly cash inflows from the project?

Accepted Answer

A) $150,000 
B) $15,000 
C) $25,000 
D) $90,000 
E) cannot be determined from this information 
A) $150,000 
B) $15,000 
C) $25,000 
D) $90,000 
E) cannot be determined from this information

Question 20

Jones Company is considering the purchase of a new machine for $57,000.The machine would generate an annual cash flow of $17,411 for five years.At the end of five years,the machine would have no salvage value.The company's cost of capital is 12 percent.The company uses straight-line depreciation. What is the internal rate of return for the machine rounded to the nearest percent?

Accepted Answer

A) 12% 
B) 18% 
C) 14% 
D) 16% 
A) 12% 
B) 18% 
C) 14% 
D) 16%

If the internal rate of return (IRR)is greater than the required rate,the project is deemed ___________.

In general terms,a sound capital investment will earn

If the internal rate of return (IRR)is less than the required rate of return,the project is __________.

Name two nondiscounting capital investment models.What is meant by nondiscounting?

When choosing among competing alternatives the ________________ model may choose an inferior project. or or

What is a capital investment decision? Give an example.

Figure 14-1. A company is considering two projects. Refer to Figure 14-1.What is the payback period for Project II?

The _________________________ measures the return on a project in terms of income. or or

Which of the following is true of capital investment decision making?

Barker Production Company is considering the purchase of a flexible manufacturing system.The annual cash benefits/savings associated with the system are: The system will cost $750,000 and will last ten years.The company's cost of capital is 10 percent. Required:

The payback period provides information to managers that can be used to help

Shoring Company is considering a project with an internal rate of return of 14.5 percent.Shoring requires a minimum rate of return of 12 percent.The net present value of the project is

The required rate of return used in the net present value model can also be called the

A follow-up analysis of a capital investment after it is implemented is called a

Which of the following is true regarding the measurement and use of indirect and intangible benefits in capital investment decision making?

The capital investment decision making model that assumes that each cash inflow is reinvested at the project's own rate of return is

Elizabeth Myers invested in a project that required an initial amount of $1,560,and returned one cash inflow of $12,000 at the end of the 18th year.A partial table of the present value of an annuity of $1 in arrears is as follows: What is the internal rate of return for this investment?

Elena Wallace invested $150,000 in a project that pays her an even amount per year for 10 years.The payback period is 6 years.What are Elena's yearly cash inflows from the project?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Statement of Cash Flows

Financial Statement Analysis

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Exam 14: Capital Investment Decisions

If the internal rate of return (IRR)is greater than the required rate,the project is deemed ___________.

In general terms,a sound capital investment will earn

If the internal rate of return (IRR)is less than the required rate of return,the project is __________.

Name two nondiscounting capital investment models.What is meant by nondiscounting?

When choosing among competing alternatives the ________________ model may choose an inferior project. or or

What is a capital investment decision? Give an example.

Figure 14-1. A company is considering two projects. Refer to Figure 14-1.What is the payback period for Project II?

The _________________________ measures the return on a project in terms of income. or or

Which of the following is true of capital investment decision making?

Barker Production Company is considering the purchase of a flexible manufacturing system.The annual cash benefits/savings associated with the system are: The system will cost $750,000 and will last ten years.The company's cost of capital is 10 percent. Required:

The payback period provides information to managers that can be used to help

Shoring Company is considering a project with an internal rate of return of 14.5 percent.Shoring requires a minimum rate of return of 12 percent.The net present value of the project is

The required rate of return used in the net present value model can also be called the

A follow-up analysis of a capital investment after it is implemented is called a

Which of the following is true regarding the measurement and use of indirect and intangible benefits in capital investment decision making?

The capital investment decision making model that assumes that each cash inflow is reinvested at the project's own rate of return is

Elizabeth Myers invested in a project that required an initial amount of $1,560,and returned one cash inflow of $12,000 at the end of the 18th year.A partial table of the present value of an annuity of $1 in arrears is as follows: What is the internal rate of return for this investment?

Elena Wallace invested $150,000 in a project that pays her an even amount per year for 10 years.The payback period is 6 years.What are Elena's yearly cash inflows from the project?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Statement of Cash Flows

Financial Statement Analysis

Filters