Question 1

Which of the following is not a capital budgeting decision?

Accepted Answer

A)  Whether to acquire a subsidiary company. 
B)  Whether to expand a product line. 
C)  Whether to fill a special order. 
D)  Whether to purchase a fleet of trucks. 
A)  Whether to acquire a subsidiary company. 
B)  Whether to expand a product line. 
C)  Whether to fill a special order. 
D)  Whether to purchase a fleet of trucks.

Question 2

Financial instruments describe all of the following except:

Accepted Answer

A)  Unearned revenues. 
B)  Cash. 
C)  Equity investments. 
D)  Contracts that call for receipts or payments of cash. 
A)  Unearned revenues. 
B)  Cash. 
C)  Equity investments. 
D)  Contracts that call for receipts or payments of cash.

Question 3

The president of Nash Company is considering a proposal by the factory manager for the purchase of a machine for $72,500. The useful life would be eight years, with no residual scrap value. The use of the machine will produce a positive annual cash flow of $14,000 a year for eight years. An annuity table shows that the present value of $1 received annually for eight years and discounted at 10% is 5.335. The net present value of the proposal, discounted at 10%, is:

Accepted Answer

A)  $2,190 positive. 
B)  Zero. 
C)  $3, 868 negative. 
D)  $3.868 positive. 
A)  $2,190 positive. 
B)  Zero. 
C)  $3, 868 negative. 
D)  $3.868 positive.

Question 4

What is the amount of depreciation deduction the company could expense annually assuming the straight line depreciation method is used?

Accepted Answer

A)  $75,000. 
B)  $41,250. 
C)  $71,500. 
D)  $30,250. 
A)  $75,000. 
B)  $41,250. 
C)  $71,500. 
D)  $30,250.

Question 5

The expected rate of return on average investment will be approximately:

Accepted Answer

A)  20%. 
B)  43%. 
C)  23%. 
D)  37 1/2%. 
A)  20%. 
B)  43%. 
C)  23%. 
D)  37 1/2%.

Which of the following is not a capital budgeting decision?

Financial instruments describe all of the following except:

What is the amount of depreciation deduction the company could expense annually assuming the straight line depreciation method is used?

The expected rate of return on average investment will be approximately:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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Exam 26: Capital Budgeting

Which of the following is not a capital budgeting decision?

Financial instruments describe all of the following except:

What is the amount of depreciation deduction the company could expense annually assuming the straight line depreciation method is used?

The expected rate of return on average investment will be approximately:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

Filters