Capital Budgeting and Managerial Decisions MCQs

?

The cost of a new machine is $24,000. The machine has a 5-year service life and no salvage. The annual cash flow will be 15% of the cost of the machin...






?

Equipment will be purchased at a cost of $30,000. It will have no salvage value. The cash flows are expected to be: $12,000, $10,000, $15,000, and $8,...






?

The company expects an after-tax income of $2,400 per year over the life of an investment that will cost $25,000, has a 5-year service life, and has n...






?

Which is not true of the net present value method of determining the acceptability of an investment?






?

Each of the three projects cost $20,000, the amount available for investment. Each project has a service life of 3 years and no salvage value. The inv...






?

When selecting an earnings rate to use in evaluating projects under the net present value method, a company will consider a rate that:






?

Which line of the following schedule is incorrect?






?

Which of the following is incorrect?






?

An additional cost that results from a particular course of action is known as a(an):






?

A cost incurred as a consequence of a past irrevocable decision and that, therefore, cannot be avoided, is known as a:






?

Which of the following is not a relevant cost in decision making? a. b. c. d.






?

The cost to produce 8,000 units at 70% capacity is: Direct materials: $16,000 Direct labour: $8,000 Factory overhead, all fixed: $12,000 Selling e...






?

Given the following list of costs, which one should be ignored in a decision to produce additional units of product for a factory that is operating at...






?

Henny-Penny has 8,000 defective units of a product that cost $4 per unit to manufacture, and can be sold for $2 per unit. These units can be reworked ...






?

Henny-Penny has 8,000 defective units of a product that cost $3 per unit to manufacture, and can be sold for $1 per unit. These units can be reworked ...






?

Sales of 50,000 units at $4 per unit are made monthly. The unit cost is $1.50. Incremental costs of $1 per unit to further process the units will resu...






?

Product A sells for $8 per unit. Its variable cost per unit is $5. Product B sells for $12 per unit. Its variable cost per unit is $8. The plant capac...






?

Segment Auburn generates total sales of $52,000, its direct expenses are $11,000, and its indirect expenses are $13,000. Its cost of goods sold is $32...






?

The following incomplete information is provided for investment decisions. .tg {border-collapse:collapse;border-spacing:0;} .tg td{border-color:b...






?

An investment project for which the net present value is $300 would result in which of the following conclusions?






?

Working capital required for an investment project would be considered as:






?

The net present value method:






?

The evaluation of an investment having uneven cash flows using the payback method:






?

In which of the following situations would a project be acceptable under the internal rate of return method? 1. The internal rate of return is equal t...






?

Anthony operates a part time auto repair service. He estimates that a new diagnostic computer system will result in increased cash inflows of $1,500 i...






?

Which of the following capital budgeting techniques implicitly assumes that the cash flows are reinvested at the company’s minimum required rate of ...






?

Billy Bob,Inc. has gathered the following data on a proposed investment project: Investment in amortizable equipment, $150,000; Annual cash flows, $ 4...






?

Billy Bob,Inc. has gathered the following data on a proposed investment project: Investment in amortizable equipment, $150,000; Annual cash flows, $ 4...






?

Which of the following statements is accurate regarding the ranking of projects using the net present value method?