chapter 12 smartbook Flashcards
Identify capital budgeting decisions.
Employee attainment decisions
Expansion decisions
Product costing decisions
Equipment replacement decisions
Expansion decisions
Equipment replacement decisions
Capital budgeting methods that focus on cash flows rather than incremental operating income are ______.
internal rate of return
net present value
payback
simple rate of return
internal rate of return
net present value
payback
The net present value of a project is Blank______.
used in determining whether or not a project is an acceptable capital investment
the present value of the project’s projected annual tax savings
the difference between the present value of cash inflows and present value of cash outflows for a project
the cost of an investment less the present value of the project’s salvage value
used in determining whether or not a project is an acceptable capital investment
the difference between the present value of cash inflows and present value of cash outflows for a project
Working capital is ______.
treated as a cash outflow when required at the beginning of a project.
treated as a cash inflow when released at the end of a project.
not treated as a cash flow in an investment project.
not discounted when computing the net present value of an investment
treated as a cash outflow when required at the beginning of a project.
treated as a cash inflow when released at the end of a project.
Preference decisions are sometimes called ___________decisions or _______________decisions.
rationing
ranking
The capital budgeting method that focus on incremental operating income rather than cash flows is______.
simple rate of return
internal rate of return
net present value
payback
simple rate of return
Typical capital budgeting decisions include ______ decisions.
A) equipment selection
B) employee hiring and firing
C) product and service pricing
D) cost reduction
E) lease or buy
A, D, E
The term _________ ____________is used to describe how managers plan significant investments in projects that have long-term implications such as the purchase of new equipment or the introduction of new products.
capital budgeting
How managers plan significant investments in projects that have long term implications such as purchasing new equipment or introducing new products is called _______________________.
capital budgeting
The term capital budgeting is used to describe how managers plan significant investments in projects that have ______ implications.
long-term
The two broad categories into which capital budgeting decisions fall are ____________ and __________.
preference and screening
