Which of the following would not be considered a capital budgeting decision?
Walmart purchases inventory for resale to customers
which of the following is a typical capital budgeting decision?
replacement of manufacturing equipment with more modern and efficient of equipment.
project Sigma requires an investment of $1,000,000 and has a net present value of $10. project Delta requires an investment of $500,000 and has a net present value of $150,000. the projects and balls unrelated new product lines
both projects should be accepted because they have positive net present value
suppose you determine that the net present value of a project is $1,525,855. what does that mean
the projects would add value to the firm
which of the following is a correct equation to solve for the net present value of the project that has a an initial outlay of $30,000 followed by incremental cash inflows in the next three years of 15,000 20000 and 30,000 assume a discount rate of 10% pe
net present value equals -30000 Plus 15000 divided by 1 point 10 raise to the second power 30000
project ETH requires an initial investment of $50,000 and has a net present value of $12,000 project be- requires an initial investment of $100,000 and has a net present value of 13,000 dollars the projects are mutually exclusive the firms should accept
project be:
Annu forklift under consideration by home ware house requires an initial investment of $100,000 and produces annual cash flows a $50,000 $40,000 and $30,000 which of the following will not change if the required rate of return is increased from 10 percent
the internal rate of return
which of the following series of cash flows could have been more than one irr
five groups of axes parentheses in first and last group
pay back for project why is
2 years
whenever the IRR on a project equals that projects required rate of return
the net present value equals 0
with respect to the capital budgeting practices of large United States corporation
irr in net present value have been gaining in popularity
incremental cash flows from a project equal
firm cash flows with the project minus the firm cash flows without the project
which of the following is not part of the projects initial cash outflow
a marketing survey completed last year to determine the project feasibility
which of the following is not considered in the calculation of incremental cash flow
sunk cost
depreciation expense is affect tax related cash flows by
decreasing taxable income thus reducing taxes
how is interest expense that is associated with a project treated in the capital budgeting process
it is built into the discount rate
which of the following expenses should be included when estimating cash flows for investment projects
opportunity cost
which of the following would increase the network capital for a project an increase in
fixed assets
which of the following should be included in the initial outlay
cost of employee training increased working capital requirements shipping and installation cost so all of the above
which of the following is included in the terminal cash flow
expected salvage value recapture of any working capital tax impact from selling assets so all of the above
which of the following is a reason why risk analysis is an important part of capital budgeting
project cash flows can be highly uncertain
which of the following are usually known with a high level of confidence at the beginning of a project
tax rates and appreciation rates
blank is a method of quantifying uncertainties without having to estimate probabilities
sensitivity analysis
net present value break even is reached
at the level of sales over the life of the project that results in a net present value of $0
in order to maximize firm W management should invest in a new assets when cash flows from the asset or discounted at the firm's blank and results in a positive net present value
cost of capital
the investors required rate of return differs from the firm's cost of capital do too
tax deductibility of interest
which of the following best describes a firm's cost of capital
the rates of return that must be earned on its investments in order to satisfy the firm's investors
which of the following must be adjusted for the firm's tax rate when estimating the weighted average cost of capital WACC
cost of debt
which of the following would not be considered and calculating of firms cost of capital
accounts payable
which of the following is a correct formula for calculating the cost of capital
WACC equals waited after tax cost of that Plus weighted cost of preferred stock Plus waited cost of common stock
the most expensive source of capital is usually
new common stock
the CAPM approach is used to determine the cost of
common equity
how frequently do most firms update their cost of capital
at least once a year
which of the following statements regarding calculating a firm's cost of capital is correct
is a company's beta increases this will increase the cost of capital
the firm's optimal capital structure is the mix of financing sources that
maximizes the total value of a firm debt and equity
affirms capital structure consists of which of the following
the amount of debt preferred stock and common stock set a firm utilizes
the primary objective of capital structure management is to find the combination of funding sources that will minimize the
WACC
which of the following should be excluded from the firm's capital structure
non-interest bearing debt
the inclusion of bankruptcy risk in firm valuation
acknowledges that a firm has an upper limit to debt financing