Capital Budgeting Paper 14

1

The technique used to evaluate all possible capital projects of different dollar amounts and then rank them according to their desirability is the






2

The profitability index (excess present value index)






3

The method that divides a project’s annual after-tax net income by the average investment cost to measure the estimated performance of a capital investment is the






4

If income tax considerations are ignored, how is depreciation handled by the following capital budgeting techniques?
Internal Rate of Return
Accounting Rate of Return
Payback






5

The recommended technique for evaluating projects when capital is rationed and there are no mutually exclusive projects from which to choose is to rank the projects by






6

The technique that reflects the time value of money and is calculated by dividing the present value of the future net after-tax cash inflows that have been discounted at the desired cost of capital by the initial cash outlay for the investment is called the






7

Flex Corporation is studying a capital acquisition proposal in which newly acquired assets will be depreciated using the straight-line method. Which one of the following statements about the proposal would be incorrect if a switch is made to the Modified Accelerated Cost Recovery System (MACRS)?






8

The technique that measures the estimated performance of a capital investment by dividing the project’s annual after-tax net income by the average investment cost is called the






9

The technique that incorporates the time value of money by determining the compound interest rate of an investment such that the present value of the after-tax cash inflows over the life of the investment is equal to the initial investment is called the






10

The technique that measures the number of years required for the after-tax cash flows to recover the initial investment in a project is called the






Result

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