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Multiple Choice



This activity contains 20 questions.

Question 1.
The most common motive for adding fixed assets to the firm is:


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Question 2.
The final step in the capital budgeting process is:


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Question 3.
A capital expenditure is all of the following except:


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Question 4.
Which pattern of cash flow stream is the most difficult to use when evaluating projects?


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Question 5.
______ projects do not compete with each other; the acceptance of one ______ the others from consideration.


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Question 6.
______ projects have the same function; the acceptance of one ______ the others from consideration.


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Question 7.
A firm with limited dollars available for capital expenditures is subject to:


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Question 8.
A conventional cash flow pattern associated with capital investment projects consists of an initial:


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Question 9.
A non-conventional cash flow pattern associated with capital investment projects consists of an initial:


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Question 10.
Sunk costs are:


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Question 11.
Initial cash flows and subsequent operating cash flows for a project are sometimes referred to as:


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Question 12.
Relevant cash flows for a project are best described as:


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Question 13.
In developing the cash flows for an expansion project, the analysis is the same as the analysis for replacement projects where:


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Question 14.
When evaluating a capital budgeting project the change in net working capital must be considered as part of the:


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Question 15.
An important cash inflow in the analysis of initial cash flows for a replacement project is:


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Question 16.
The tax treatment regarding the sale of existing assets which are sold for more than the book value and more than the original purchase price results in:


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Question 17.
The basic variables that must be considered in determining the initial investment associated with a capital expenditure are all of the following EXCEPT:


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Question 18.
The tax treatment regarding the sale of existing assets which are sold for their book value results in:


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Question 19.
The tax treatment regarding the sale of existing assets which are depreciable and used in business and are sold for less than the book value results in:


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Question 20.
Benefits expected from proposed capital expenditures must be on an after-tax basis because:


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