Exam 21: Information for Capital Expenditure Decisions

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When analysing capital expenditure proposals,if a firm is interested in cash inflows and cash outflows,depreciation resulting from the expenditure would always be treated as a cash outflow.

(True/False)

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Question 101

What is the quantitative decision rule for the net present value method?

(Multiple Choice)

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Question 102

The use of future value to calculate the present value is called:

(Multiple Choice)

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Question 103

The systematic follow up of each project to see how it turned out is called:

(Multiple Choice)

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Question 104

Veritas Ltd is considering investing in a new machine which costs $450 000.For accounting purposes this machine can be fully depreciated over 6 years;but for tax purposes,the machine can be fully depreciated over 5 years.The machine has no resale value.The annual cost savings resulting from the purpose of this machine is $100 000.Assume a tax rate of 30 per cent.The payback period is:

(Multiple Choice)

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Question 105

For a capital investment of $800 000,what are the yearly cash inflows to the nearest thousand if the net present value is zero and a four-year annuity has a 12 per cent required rate of return?

(Multiple Choice)

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Question 106

The manager of Malan Pty Ltd wants to buy a new machine to replace the one currently being used.The new machine will cost $100 000 with no disposal value at the end of a five-year useful life.The manager estimates that the machine will reduce annual operating costs by $30 000.Depreciation will be $20 000 per year for five years.The tax rate for each year is expected to be 20 per cent and the company has an after-tax hurdle rate of 12 per cent.What is the after-tax accounting rate of return computed based on the initial investment?

(Multiple Choice)

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Question 107

If $2000 is invested at 10 per cent at the start of every year for three years,how much will you have accumulated at the end of the three years?

(Multiple Choice)

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Question 108

Showing 101 - 108 of 108

When analysing capital expenditure proposals,if a firm is interested in cash inflows and cash outflows,depreciation resulting from the expenditure would always be treated as a cash outflow.

What is the quantitative decision rule for the net present value method?

The use of future value to calculate the present value is called:

The systematic follow up of each project to see how it turned out is called:

For a capital investment of $800 000,what are the yearly cash inflows to the nearest thousand if the net present value is zero and a four-year annuity has a 12 per cent required rate of return?

If $2000 is invested at 10 per cent at the start of every year for three years,how much will you have accumulated at the end of the three years?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

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