Question : Multiple choice 35.Which of the following not considered a capital budgeting : 1302825

 

Multiple choice

 

35.Which of the following is not considered a capital budgeting project?

A.Purchase of a new packaging machine

B.Purchase of land on which to build a new factory

C.Purchase of a new delivery truck to replace an old truck

D.Purchase of inventory to be sold in the future

 

36.Capital expenditure decisions

A.are useful for estimating inventory acquisition costs.

B.always involve the acquisition of long-lived assets.

C.consist of a final list of approved projects.

D.All of these answer choices are correct.

 

37.Which of the following is not a component of a time value of money calculation?

A.The amount of cash to be received

B.The time until the cash will be received

C.The opportunity costs of the alternative actions

D.The required rate of return

 

38.The basic concept involved in time value of money calculations is that

A.it is better to receive a dollar today than to receive a dollar in the future.

B.incremental revenues must exceed incremental costs.

C.you get what you measure.

D.revenue must be earned in order for net income to be generated

 

39.Present value techniques

A.determine the effects of time value of money on future net income that will be generated.

B.are a way of converting future dollars into their equivalent current dollars.

C.provide more conservative results than similar time value of money computations.

D.treat a dollar received today to be worth the value of a dollar to be received a year from today.

 

40.Which of the following pairs of techniques use the time value of money concept?

A.Payback period method and the internal rate of return method

B.Internal rate of return method and the accounting rate of return method

C.Accounting rate of return method and the payback period method

D.Internal rate of return method and the net present value method

 

41.Your required rate of return is greater than zero. How much is a payment of $3,000 to be received a year from today worth?

A.Less than $3,000 today

B.Exactly $3,000 today

C.More than $3,000 today

D.Not enough information is provided to determine the answer.

 

42.Which of the following would most likely be the present value of a 4-year annuity of $2,000 per year, assuming a positive discount rate?

A.$8,000

B.$7,000

C.$9,500

D.$2,000

 

43.Assuming a 6% rate of return, how does the present value of an amount to be received two years from today compare to the present value of the same amount to be received three years from today?

A.The present value of the amount to be received in two years is greater than the present value of amount to be received three years from today.

B.The present value of the amount to be received in two years is lesser than the present value of amount to be received three years from today.

C.The present values of the two amounts are equal.

D.It is impossible to tell unless the actual amount to be received is known.

 

44.Suppose you face the prospect of receiving $800 per year for the next five years and a $200 payment at the end of six years. How much is this prospect worth today if the required rate of return is 9%?

A.$4,200

B.$3,112

C.$3,242

D.$3,231

 

 

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