Question 1

Match each item with the correct statement below.
-interest rate used to discount future cash flows

Accepted Answer

A) Payback period 
B) Accounting rate of return 
C) Net present value 
D) Internal rate of return 
E) Discount rate
F)Annuity
G)Post-audit
H)Compounding of interest 
A) Payback period 
B) Accounting rate of return 
C) Net present value 
D) Internal rate of return 
E) Discount rate
F)Annuity
G)Post-audit
H)Compounding of interest

Question 2

When the risk of obsolescence is high, managers will want

Accepted Answer

A)  a shorter payback period. 
B)  a longer payback period. 
C)  a payback period equal to the life of the investment. 
D)  All of these. 
E)  None of these. 
A)  a shorter payback period. 
B)  a longer payback period. 
C)  a payback period equal to the life of the investment. 
D)  All of these. 
E)  None of these.

Question 3

Figure 14-2.A company is considering two projects.  
-Refer to Figure 14-2. What is the payback period for Project A?

Accepted Answer

A)  4.5 year 
B)  2.5 years 
C)  5 years 
D)  3.5 years 
E)  4 years 
A)  4.5 year 
B)  2.5 years 
C)  5 years 
D)  3.5 years 
E)  4 years

Question 4

If the net present value of an investment is zero, the investment earns less than the minimum required rate of return.

Accepted Answer

A) True 
 B)False

Question 5

_______________________ are concerned with the process of planning, setting goals and priorities, arranging financing, and using certain criteria to select long-term assets.

Accepted Answer

Capital in

Question 6

Figure 14-4.Sony Lavery is considering investing $45,000 in a project with the following cash revenues and expenses:
  
-Refer to Figure 14-4. What is the accounting rate of return for the project?

Accepted Answer

A)  32% 
B)  41% 
C)  20% 
D)  26% 
E)  35% 
A)  32% 
B)  41% 
C)  20% 
D)  26% 
E)  35%

Question 7

An obvious problem with postaudits is that the assumptions driving the original analysis may often be invalidated by changes in the actual operating environment.

Accepted Answer

A) True 
 B)False

Question 8

Five mutually exclusive projects had the following information:   Which project is preferred?

Accepted Answer

A)  Project V 
B)  Project W 
C)  Project X 
D)  Project Y 
A)  Project V 
B)  Project W 
C)  Project X 
D)  Project Y

Question 9

Projects that if accepted preclude the acceptance of all other competing projects are called mutually exclusive projects.

Accepted Answer

A) True 
 B)False

Question 10

The process of making capital investment decisions often is referred to as ________________.

Accepted Answer

The answer of The process of making capital investment decisions...

Question 11

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 12

A disadvantage of the payback period is that it ignores the time value of money.

Accepted Answer

A) True 
 B)False

Question 13

Figure 14-10.Present value of $1
   Present value of an Annuity of $1
  
-Refer to Figure 14-10. Howard-Parr Company is considering an investment that will have an initial cost of $500,000 and yield annual net cash inflows of $130,000. Yearly depreciation will be $100,000. The equipment is expected to be useful for five years, at which point it will be scrapped with no salvage value. Howard-Parr requires a minimum rate of return of 10%.

Accepted Answer

The answer of Figure 14-10.Present value of $1
  ...

Question 14

Greg Moss has just invested $120,000 in a coffee shop. He expects to receive cash income of $15,000 a year. What is the payback period?

Accepted Answer

A)  5 years 
B)  7.7 years 
C)  4.5 years 
D)  6.5 years 
E)  8 years 
A)  5 years 
B)  7.7 years 
C)  4.5 years 
D)  6.5 years 
E)  8 years

Question 15

Fill in the lettered blanks in the following table:

Accepted Answer

The answer of Fill in the lettered blanks in the...

Question 16

Less objective results are obtainable if an independent party performs the postaudit of a capital investment.

Accepted Answer

A) True 
 B)False

Question 17

Figure 14-4.Sony Lavery is considering investing $45,000 in a project with the following cash revenues and expenses:
  
-Refer to Figure 14-4. What is the average income for the project?

Accepted Answer

A)  $19,250 
B)  $30,000 
C)  $20,000 
D)  $14,500 
E)  $18,000 
A)  $19,250 
B)  $30,000 
C)  $20,000 
D)  $14,500 
E)  $18,000

Question 18

The amount that must be invested now to produce a future value is known as the ____________ of the future amount.

Accepted Answer

The answer of The amount that must be invested now...

Question 19

Amatra Inc., has the opportunity to invest in new equipment that will cost $113,000. The net cash inflows for ten years equal $20,000 per year. What is the internal rate of return for the investment? A partial table of the present value of an annuity of $1 in arrears is as follows:

Accepted Answer

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

Question 20

The two types of capital budgeting projects are ________________ and _______________.

Accepted Answer

independent projects, mutually

Match each item with the correct statement below. -interest rate used to discount future cash flows

When the risk of obsolescence is high, managers will want

Figure 14-2.A company is considering two projects. -Refer to Figure 14-2. What is the payback period for Project A?

If the net present value of an investment is zero, the investment earns less than the minimum required rate of return.

_______________________ are concerned with the process of planning, setting goals and priorities, arranging financing, and using certain criteria to select long-term assets.

Figure 14-4.Sony Lavery is considering investing $45,000 in a project with the following cash revenues and expenses: -Refer to Figure 14-4. What is the accounting rate of return for the project?

An obvious problem with postaudits is that the assumptions driving the original analysis may often be invalidated by changes in the actual operating environment.

Five mutually exclusive projects had the following information: Which project is preferred?

Projects that if accepted preclude the acceptance of all other competing projects are called mutually exclusive projects.

The process of making capital investment decisions often is referred to as ________________.

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

A disadvantage of the payback period is that it ignores the time value of money.

Greg Moss has just invested $120,000 in a coffee shop. He expects to receive cash income of $15,000 a year. What is the payback period?

Fill in the lettered blanks in the following table:

Less objective results are obtainable if an independent party performs the postaudit of a capital investment.

Figure 14-4.Sony Lavery is considering investing $45,000 in a project with the following cash revenues and expenses: -Refer to Figure 14-4. What is the average income for the project?

The amount that must be invested now to produce a future value is known as the ____________ of the future amount.

Amatra Inc., has the opportunity to invest in new equipment that will cost $113,000. The net cash inflows for ten years equal $20,000 per year. What is the internal rate of return for the investment? A partial table of the present value of an annuity of $1 in arrears is as follows:

The two types of capital budgeting projects are __ and _.

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

Exam 14: Capital Investment Decisions

Match each item with the correct statement below. -interest rate used to discount future cash flows

When the risk of obsolescence is high, managers will want

Figure 14-2.A company is considering two projects. -Refer to Figure 14-2. What is the payback period for Project A?

If the net present value of an investment is zero, the investment earns less than the minimum required rate of return.

_______________________ are concerned with the process of planning, setting goals and priorities, arranging financing, and using certain criteria to select long-term assets.

Figure 14-4.Sony Lavery is considering investing $45,000 in a project with the following cash revenues and expenses: -Refer to Figure 14-4. What is the accounting rate of return for the project?

An obvious problem with postaudits is that the assumptions driving the original analysis may often be invalidated by changes in the actual operating environment.

Five mutually exclusive projects had the following information: Which project is preferred?

Projects that if accepted preclude the acceptance of all other competing projects are called mutually exclusive projects.

The process of making capital investment decisions often is referred to as ________________.

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

A disadvantage of the payback period is that it ignores the time value of money.

Greg Moss has just invested $120,000 in a coffee shop. He expects to receive cash income of $15,000 a year. What is the payback period?

Fill in the lettered blanks in the following table:

Less objective results are obtainable if an independent party performs the postaudit of a capital investment.

Figure 14-4.Sony Lavery is considering investing $45,000 in a project with the following cash revenues and expenses: -Refer to Figure 14-4. What is the average income for the project?

The amount that must be invested now to produce a future value is known as the ____________ of the future amount.

Amatra Inc., has the opportunity to invest in new equipment that will cost $113,000. The net cash inflows for ten years equal $20,000 per year. What is the internal rate of return for the investment? A partial table of the present value of an annuity of $1 in arrears is as follows:

The two types of capital budgeting projects are ________________ and _______________.

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

The two types of capital budgeting projects are __ and _.