Exam 7: Capital Budgeting, Time Value of Money, and Cost-Benefit Analysis: Process, Structure, and Basic Tools

What is the Net Present Value for a project costing $200,000 in the first year no discount) that produces a net benefit of $40,000/year for seven years when the discount rate is 7%?

Advantages of a capital budget process include all the following EXCEPT:

What is the Benefit Cost Ratio for a project costing $200,000 in the first year no discount) that produces a net benefit of $50,000/year for five years when the discount rate is 5%?

Two government projects have the following benefit profiles: -Which of the following statements is accurate?

When evaluating the viability of a project, the test of economic efficiency requires that:

To what value would $20,000 compound in five years, assuming an annual discount rate of 5%?

Why are the capital costs of long-term projects discounted to present value?

Which of the following is not a characteristic of a capital expenditure, for the purposes of government budgeting?

Benefits received in the future are adjusted to their present value discounted because:

Which of the following would be a reasonable component of a state capital budget?

A lower discount rate applied to a given flow of returns in the future