BMAL 590 ACCOUNTING EXAM
QUESTIONS AND ANSWERS. VERIFIED
2025/2026.
Decisions to install new equipment, replace old equipment, and purchase or construct a new
building are examples of - ANS Capital investment analysis
Which of the following are present value methods of analyzing capital investment proposals? -
ANS Net present value and internal rate of return
By converting dollars to be received in the future into current dollars, the present value
methods take into consideration that money - ANS has a time value
The primary advantages of the average rate of return method are its ease of computation and
the fact that - ANS it emphasizes the amount of income earned over the life of the proposal
Which of the following can be used to place capital investment proposals involving different
amounts of investment on a comparable basis for purposes of net present value analysis? -
ANS Present value index
An analysis of a proposal by the net present value method indicated that the present value
exceed the amount to be invested. Which of the following statements best describe the results
of this analysis? - ANS The proposal is desirable and the rate of return expected from the
proposal exceeds the minimum rate used for the analysis
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, In general, present value methods of analyzing capital investments are more desirable than
methods ignoring present value because - ANS The present value methods consider that a
dollar today is worth more than a dollar in the future due to the potential earning power of that
dollar
Which method of evaluating capital investment proposals uses the concept of present value to
compute a rate of return? - ANS Internal rate of return
When several alternative investment proposals of the same amount are being considered, the
one with the largest net present value is the most desirable. If the alternative proposal involve
different amounts of investment, it is useful to prepare a relative ranking of the proposals by
using a(n) - ANS Present value index
Which method of evaluating capital investment proposals uses present value concepts to
compute the rate of return from the net cash flows expected from capital investment
proposals? - ANS Internal rate of return
The present value index is computed using which of the following formulas? - ANS Total
present value of net cash flow/Amount to be invested
Which of the following is a present value method of analyzing capital investment proposals? -
ANS Net present value
An analysis of a proposal by the net present value method indicated that the present value of
future cash flows exceeded the amount to be invested. Which of the following statements best
describes the results of this analysis? - ANS The proposal is desirable and the rate of return
expected from the proposal exceeds the minimum rate used for the analysis
All of the following are factors that may complicate capital investment analysis EXCEPT -
ANS Sunk cost
Which of the following provisions of the Internal Revenue Code can be used to reduce the
amount of the income tax expense arising from the capital investment projects? -
ANS Depreciation deduction
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
QUESTIONS AND ANSWERS. VERIFIED
2025/2026.
Decisions to install new equipment, replace old equipment, and purchase or construct a new
building are examples of - ANS Capital investment analysis
Which of the following are present value methods of analyzing capital investment proposals? -
ANS Net present value and internal rate of return
By converting dollars to be received in the future into current dollars, the present value
methods take into consideration that money - ANS has a time value
The primary advantages of the average rate of return method are its ease of computation and
the fact that - ANS it emphasizes the amount of income earned over the life of the proposal
Which of the following can be used to place capital investment proposals involving different
amounts of investment on a comparable basis for purposes of net present value analysis? -
ANS Present value index
An analysis of a proposal by the net present value method indicated that the present value
exceed the amount to be invested. Which of the following statements best describe the results
of this analysis? - ANS The proposal is desirable and the rate of return expected from the
proposal exceeds the minimum rate used for the analysis
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, In general, present value methods of analyzing capital investments are more desirable than
methods ignoring present value because - ANS The present value methods consider that a
dollar today is worth more than a dollar in the future due to the potential earning power of that
dollar
Which method of evaluating capital investment proposals uses the concept of present value to
compute a rate of return? - ANS Internal rate of return
When several alternative investment proposals of the same amount are being considered, the
one with the largest net present value is the most desirable. If the alternative proposal involve
different amounts of investment, it is useful to prepare a relative ranking of the proposals by
using a(n) - ANS Present value index
Which method of evaluating capital investment proposals uses present value concepts to
compute the rate of return from the net cash flows expected from capital investment
proposals? - ANS Internal rate of return
The present value index is computed using which of the following formulas? - ANS Total
present value of net cash flow/Amount to be invested
Which of the following is a present value method of analyzing capital investment proposals? -
ANS Net present value
An analysis of a proposal by the net present value method indicated that the present value of
future cash flows exceeded the amount to be invested. Which of the following statements best
describes the results of this analysis? - ANS The proposal is desirable and the rate of return
expected from the proposal exceeds the minimum rate used for the analysis
All of the following are factors that may complicate capital investment analysis EXCEPT -
ANS Sunk cost
Which of the following provisions of the Internal Revenue Code can be used to reduce the
amount of the income tax expense arising from the capital investment projects? -
ANS Depreciation deduction
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
