ACTY 2110 - Ch. 11 UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS
a, b, c, e, f Capital budgeting decisions include ___ _.
a.) acquiring a new facility to increase capacity
b.) deciding to replace old equipment
c.) purchasing new equipment to reduce cost
d.) increasing the salary of the current company president
e.) determining which equipment to purchase among available alternatives
f.) choosing to lease or buy new equipment
g.) hiring new factory workers
capital budgeting A tool to help managers make decisions about investments in major assets such as
new facilities, equipment, and products is called __ _.
screening, preference The two types of capital investment decisions are _____ decisions and ____ decisions.
screening Narrowing down a set of projects for further consideration is a(n) ___ decision.
true True or false: Preference decisions are made to prioritize and select from capital
budgeting alternatives.
a, b, d Typical capital budgeting decisions include ___ _.
a.) lease or buy decisions
b.) research and development projects
c.) employee hiring and firing decisions
d.) equipment selection decisions
e.) product and service pricing decisions
, true True or false: For capital budgeting purposes, capital assets includes item
research and development projects.
independent When projects are ___ or unrelated to one another, each project can be
evaluated on its own merit.
a Deciding whether to purchase or lease a vehicle is an example of a(n) ____ project
decision.
a.) mutually exclusive
b.) unrelated independent
a, d A screening decision ___ _.
a.) is used to determine if a project is a candidate for further consideration
b.) relates to whether a proposed project is the best option among more than one
acceptable project
c.) is made after a capital budgeting project is accepted
d.) relates to whether a proposed project meets some minimum criteria
non discounting Capital investment methods that ignore the time value of money are referred to as
_______ methods.
preference Managers are required to evaluate and compare more than one capital
investment alternative when making a(n) decision.
a, b Which of the following statements are true?
a.) The time value of money should be considered in capital budgeting decisions.
b.) Money is more valuable today than it will be in the future.
c.) The payback method is a discounted cash flow method.
capital investment Investing in new technology to save on labor costs is an example of a(n) _____ _____
decision.
independent When two projects are ___ , investing in one of the projects does not preclude
investing in the other.
discounted cash flow Net present value, internal rate of return, and profitability index are referred to as
_ _________ methods because they incorporate the time value of money.
false True or false: When two projects are mutually exclusive, investing in one does not
eliminate the other one from consideration.
d Unlike other capital budgeting methods, the accounting rate of return method
focuses on ______, rather than _.
a.) cash flows, net operating income
b.) the initial investment, the salvage value
c.) the salvage value, the initial investment
d.) net operating income, cash flows
a, b, c, e, f Capital budgeting decisions include ___ _.
a.) acquiring a new facility to increase capacity
b.) deciding to replace old equipment
c.) purchasing new equipment to reduce cost
d.) increasing the salary of the current company president
e.) determining which equipment to purchase among available alternatives
f.) choosing to lease or buy new equipment
g.) hiring new factory workers
capital budgeting A tool to help managers make decisions about investments in major assets such as
new facilities, equipment, and products is called __ _.
screening, preference The two types of capital investment decisions are _____ decisions and ____ decisions.
screening Narrowing down a set of projects for further consideration is a(n) ___ decision.
true True or false: Preference decisions are made to prioritize and select from capital
budgeting alternatives.
a, b, d Typical capital budgeting decisions include ___ _.
a.) lease or buy decisions
b.) research and development projects
c.) employee hiring and firing decisions
d.) equipment selection decisions
e.) product and service pricing decisions
, true True or false: For capital budgeting purposes, capital assets includes item
research and development projects.
independent When projects are ___ or unrelated to one another, each project can be
evaluated on its own merit.
a Deciding whether to purchase or lease a vehicle is an example of a(n) ____ project
decision.
a.) mutually exclusive
b.) unrelated independent
a, d A screening decision ___ _.
a.) is used to determine if a project is a candidate for further consideration
b.) relates to whether a proposed project is the best option among more than one
acceptable project
c.) is made after a capital budgeting project is accepted
d.) relates to whether a proposed project meets some minimum criteria
non discounting Capital investment methods that ignore the time value of money are referred to as
_______ methods.
preference Managers are required to evaluate and compare more than one capital
investment alternative when making a(n) decision.
a, b Which of the following statements are true?
a.) The time value of money should be considered in capital budgeting decisions.
b.) Money is more valuable today than it will be in the future.
c.) The payback method is a discounted cash flow method.
capital investment Investing in new technology to save on labor costs is an example of a(n) _____ _____
decision.
independent When two projects are ___ , investing in one of the projects does not preclude
investing in the other.
discounted cash flow Net present value, internal rate of return, and profitability index are referred to as
_ _________ methods because they incorporate the time value of money.
false True or false: When two projects are mutually exclusive, investing in one does not
eliminate the other one from consideration.
d Unlike other capital budgeting methods, the accounting rate of return method
focuses on ______, rather than _.
a.) cash flows, net operating income
b.) the initial investment, the salvage value
c.) the salvage value, the initial investment
d.) net operating income, cash flows
