Question 1

The ______________cost is the expected cash payment to be made to put the capital budget proposal into operation.

Accepted Answer

initial

Question 2

Where a business cannot obtain sufficient cash to make all of the desired investments this is known as:

Accepted Answer

A)  capital investment. 
B)  capital rationing. 
C)  capital appraisal. 
D)  capital apportionment. 
A)  capital investment. 
B)  capital rationing. 
C)  capital appraisal. 
D)  capital apportionment. B

Question 3

The value of projects and initiatives driven by ___________ ___________ _________ thinking are often not captured in long term planning.

Accepted Answer

triple bottom line

Question 4

A capital expenditure proposal is acceptable to a business when its _________________ ____ ______________ is greater than the cost to the business of providing the cash to make the investment.

Accepted Answer

The answer of A capital expenditure proposal is acceptable to...

Question 5

Capital expenditure alternatives such as not buying a machine or not expanding a factory are referred to as the 'do-nothing' alternative.

Accepted Answer

A) True 
 B)False

Question 6

The rate that measures a business' cost of obtaining cash for investments, and is used as a cut off to distinguish between acceptable and unacceptable investment proposals, is called the business':

Accepted Answer

A)  average rate of return. 
B)  discount rate. 
C)  internal rate of return. 
D)  cost of capital. 
A)  average rate of return. 
B)  discount rate. 
C)  internal rate of return. 
D)  cost of capital.

Question 7

A business' cut-off rate that is used in evaluating whether capital expenditure proposals will benefit the business is referred to as the business' _____________ _________ ____ ________.

Accepted Answer

The answer of A business' cut-off rate that is used...

Question 8

If faced with mutually exclusive capital expenditure proposals, a business will choose the alternative with the highest net present value.

Accepted Answer

A) True 
 B)False

Question 9

Future cash flows that differ either in amount or timing depending upon which decision alternative is chosen, are:

Accepted Answer

A)  relevant cash flows. 
B)  sunk cash flows. 
C)  mutually exclusive cash flows. 
D)  non-relevant cash flows. 
A)  relevant cash flows. 
B)  sunk cash flows. 
C)  mutually exclusive cash flows. 
D)  non-relevant cash flows.

Question 10

Choosing ____________________ alternative does not change a business' cash flows.

Accepted Answer

The answer of Choosing ____________________ alternative does not change a...

Question 11

Example 12.1
Use the information below to answer the following questions.
The Schroeder Business has identified the investment proposals shown below as acceptable.
 $$\begin{array} { c c c } 
\begin{array} { c } 
\text { Investment } \
\text { Proposal }
\end{array} & \begin{array} { c } 
\text { Required } \
\text { Investment }
\end{array} & \begin{array} { c } 
\text { Net Present } \
\text { Value }
\end{array} \
\hline\text { A } & \$ 20000 & \$ 10000\
\text { B } & 50000 &  16000  \
\text { C } & 30000 & 8000 \
\text { D } & 30000 &7000 \\
\text { E } & 20000 &11000 \
\end{array}$$
-Refer to Example 12.1. Assuming the proposals are mutually exclusive, which proposal should be chosen?

Accepted Answer

A)  Proposal A 
B)  Proposal B 
C)  Proposal C 
D)  Proposal E. 
A)  Proposal A 
B)  Proposal B 
C)  Proposal C 
D)  Proposal E.

Question 12

A business' cost of capital is the ____________________ it must pay to all sources of capital.

Accepted Answer

A)  fixed-average cost of capital 
B)  variable-average cost of capital 
C)  weighted-average cost of capital 
D)  none of the options given 
A)  fixed-average cost of capital 
B)  variable-average cost of capital 
C)  weighted-average cost of capital 
D)  none of the options given

Question 13

Future cash flows that differ, either in amount or timing, as a result of accepting a capital expenditure proposal are called relevant cash flows.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is ignored in capital expenditure analysis computations?

Accepted Answer

A)  Annual net cash inflows. 
B)  Depreciation expense. 
C)  Cost of the investment under consideration. 
D)  Residual value. 
A)  Annual net cash inflows. 
B)  Depreciation expense. 
C)  Cost of the investment under consideration. 
D)  Residual value.

Question 15

The Somewhat Limited Company has $60 000 of cash available for investment during 2015. The business has the following five investment proposals available to choose from:
 $\begin{array}{ccc}
& \text { Investment } & \text { Net Present } \
 \underline{\text { Proposal }} &  \underline{\text { Required }} &  \underline{\text { Value }}\
\mathrm{A} & \$ 20000 & \$ 15000 \
\text { B } & 10000 & 6000 \
\text { C } & 10000 & 8000 \
\text { D } & 20000 & 5000 \
\text { E } & 40000 & 20000
\end{array}$
 Required:
Determine which proposals the Somewhat Limited Company should choose using the maximum net present value approach.

Accepted Answer

A and E (T

Question 16

A business is evaluating a potential investment in a training program for employees that will cost $45 000 today. The training is expected to save $15 000 every year for the next 5 years. What cash flows would be evaluated for capital expenditure analysis?

Accepted Answer

A)  Initial cash flow of $45 000 only. 
B)  Outflows of $15 000 every year for the next 5 years only. 
C)  Initial cash flow of $45 000 plus inflow of $15 000 every year for the next 5 years. 
D)  None, as this is an operating expenditure analysis, not a capital expenditure analysis 
A)  Initial cash flow of $45 000 only. 
B)  Outflows of $15 000 every year for the next 5 years only. 
C)  Initial cash flow of $45 000 plus inflow of $15 000 every year for the next 5 years. 
D)  None, as this is an operating expenditure analysis, not a capital expenditure analysis

Question 17

The Tearess Company can accept either Proposal A or Proposal B (but not both), or it can reject both investment proposals. Proposal A requires an investment of $7000 and promises increased net cash inflows of $2600 for 5 years. Proposal B requires an investment of $7000 and promises increased net cash inflows of $3000 in each of the first 3 years, $2000 in the fourth year and $2200 in the fifth year. The business' minimum acceptable rate of return is 20%.
Required:
Prepare an analysis to determine which (if either) of the proposals should be selected for investment.

Accepted Answer

Therefore, accept In

Question 18

A capital expenditure decision is a _____________decision on whether or not to make an investment at the time of the decision in order to obtain future net cash receipts totalling more than the investment.

Accepted Answer

The answer of A capital expenditure decision is a _____________decision...

Question 19

The 'working capital' of a capital expenditure proposal is the expected cash payment to be made to put the proposal into operation.

Accepted Answer

A) True 
 B)False

Question 20

The Able Company has identified the investment proposals shown below as acceptable. However, only $30 000 can be made available for investment.
 $\begin{array}{ccc}
& \text { Investment } & \text { Net Present } \
 \underline{\text { Proposal }} &  \underline{\text { Required }} &  \underline{\text { Value }}\
\mathrm{A} & \$ 10000 & \$ 5000 \
\text { B } & 20000 & 8000 \
\text { C } & 20000 & 7000 \
\text { D } & 10000 & 4000 \
\text { E } & 10000 &30000
\end{array}$

Required:
Determine the combination of proposals to be selected using the maximum net present value approach.

Accepted Answer

None

The ______________cost is the expected cash payment to be made to put the capital budget proposal into operation.

Where a business cannot obtain sufficient cash to make all of the desired investments this is known as:

The value of projects and initiatives driven by _____ _ _____ thinking are often not captured in long term planning.

A capital expenditure proposal is acceptable to a business when its ___ is greater than the cost to the business of providing the cash to make the investment.

Capital expenditure alternatives such as not buying a machine or not expanding a factory are referred to as the 'do-nothing' alternative.

The rate that measures a business' cost of obtaining cash for investments, and is used as a cut off to distinguish between acceptable and unacceptable investment proposals, is called the business':

A business' cut-off rate that is used in evaluating whether capital expenditure proposals will benefit the business is referred to as the business' _________ _ ____.

If faced with mutually exclusive capital expenditure proposals, a business will choose the alternative with the highest net present value.

Future cash flows that differ either in amount or timing depending upon which decision alternative is chosen, are:

Choosing ____________________ alternative does not change a business' cash flows.

A business' cost of capital is the ____________________ it must pay to all sources of capital.

Future cash flows that differ, either in amount or timing, as a result of accepting a capital expenditure proposal are called relevant cash flows.

Which of the following is ignored in capital expenditure analysis computations?

A business is evaluating a potential investment in a training program for employees that will cost $45 000 today. The training is expected to save $15 000 every year for the next 5 years. What cash flows would be evaluated for capital expenditure analysis?

A capital expenditure decision is a _____________decision on whether or not to make an investment at the time of the decision in order to obtain future net cash receipts totalling more than the investment.

The 'working capital' of a capital expenditure proposal is the expected cash payment to be made to put the proposal into operation.

Introduction to Business Accounting and the Role of Professional Skills

Developing a Business Plan: Cost-Volume-Profit Analysis

Developing a Business Plan: Budgeting

The Accounting System: Concepts and Applications

Recording, Storing and Reporting Accounting Information

Managing and Reporting Working Capital

The Income Statement: Content and Use

The Balance Sheet: Content, Use and Analysis

The Cash Flow Statement: Content and Use

Sustainable Business

Short-Term Planning Decisions

Filters

Exam 12: Capital Expenditure Decisions

The ______________cost is the expected cash payment to be made to put the capital budget proposal into operation.

Where a business cannot obtain sufficient cash to make all of the desired investments this is known as:

The value of projects and initiatives driven by ___________ ___________ _________ thinking are often not captured in long term planning.

A capital expenditure proposal is acceptable to a business when its _________________ ____ ______________ is greater than the cost to the business of providing the cash to make the investment.

Capital expenditure alternatives such as not buying a machine or not expanding a factory are referred to as the 'do-nothing' alternative.

The rate that measures a business' cost of obtaining cash for investments, and is used as a cut off to distinguish between acceptable and unacceptable investment proposals, is called the business':

A business' cut-off rate that is used in evaluating whether capital expenditure proposals will benefit the business is referred to as the business' _____________ _________ ____ ________.

If faced with mutually exclusive capital expenditure proposals, a business will choose the alternative with the highest net present value.

Future cash flows that differ either in amount or timing depending upon which decision alternative is chosen, are:

Choosing ____________________ alternative does not change a business' cash flows.

A business' cost of capital is the ____________________ it must pay to all sources of capital.

Future cash flows that differ, either in amount or timing, as a result of accepting a capital expenditure proposal are called relevant cash flows.

Which of the following is ignored in capital expenditure analysis computations?

A business is evaluating a potential investment in a training program for employees that will cost $45 000 today. The training is expected to save $15 000 every year for the next 5 years. What cash flows would be evaluated for capital expenditure analysis?

A capital expenditure decision is a _____________decision on whether or not to make an investment at the time of the decision in order to obtain future net cash receipts totalling more than the investment.

The 'working capital' of a capital expenditure proposal is the expected cash payment to be made to put the proposal into operation.

Introduction to Business Accounting and the Role of Professional Skills

Developing a Business Plan: Cost-Volume-Profit Analysis

Developing a Business Plan: Budgeting

The Accounting System: Concepts and Applications

Recording, Storing and Reporting Accounting Information

Managing and Reporting Working Capital

The Income Statement: Content and Use

The Balance Sheet: Content, Use and Analysis

The Cash Flow Statement: Content and Use

Sustainable Business

Short-Term Planning Decisions

Filters

The value of projects and initiatives driven by _____ _ _____ thinking are often not captured in long term planning.

A capital expenditure proposal is acceptable to a business when its ___ is greater than the cost to the business of providing the cash to make the investment.

A business' cut-off rate that is used in evaluating whether capital expenditure proposals will benefit the business is referred to as the business' _________ _ ____.