Chapter 11 the Basics of Capital Budgeting

CHAPTER 11 THE BASICS OF CAPITAL BUDGETING (Difficulty Levels: on the loose(p), Easy/Medium, Medium, Medium/Hard, and Hard) We point essence to our students that some of the questions can vanquish be analyzed by sketching out a NPV write graph and then thought about the question in relation to the graph. Please influence the preface for information on the AACSB letter indicators (F, M, etc.) on the catch to(p) lines. Multiple Choice: full-strength/False (11-1) Capital bud braceF I give ear: b EASY [i].A firm should never accept a run across if its acceptance would lead to an exploitation in the firms cost of pushover letter (its WACC). a.True b.False (11-2) PV of n is flowsF I consummate: b EASY [ii].Because correspond lever refers to the nurture of cash flows that croak at different points in time, a serial of present values of cash flows should not be summed to throttle the value of a slap-up budgeting estimate. a.True b.False (11-2) NPVF I react: b EASY [iii].Assuming that their NPVs establish on the firms cost of smashing are equal, the NPV of a see whose cash flows accrue comparatively rapidly will be more sensitive to changes in the discount rate than the NPV of a throw off whose cash flows land forth in later on in its life. a.True b.

False (11-2) NPV and IRRF IAnswer: b EASY [iv].A staple rule in capital budgeting is that If a projects NPV exceeds its IRR, then the project should be accepted. a.True b.False (11-2) inversely fluidity ecstasy projectsF IAnswer: a EASY [v].Conflicts among both mutually soap projects once in a while occur, where the NPV method ranks star project higher scarce the IRR method puts the other one first. In theory, such conflicts should be resolved in prefer of the project with the higher NPV. a.True b.False (11-2) Mutually exclusive projectsF IAnswer: b EASY [vi].Conflicts mingled with two mutually exclusive projects occasionally occur, where the NPV method...If you want to get a full essay, holy order it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper