Matching
Match each one of the examples below with one of the stages of the capital budgeting decision model.
Stages:
Premises:
Monitoring the costs to operate a new machine
Use of the internal rate of return for each alternative
Estimating yearly cash flows and setting investment budgets accordingly using a 12-year planning horizon.
Percentage of defective merchandise considered too high
Learning how to effectively operate Machine #8 only takes 15 minutes
Tracking realized cash flows and comparing against estimated numbers.
Will introducing the new product substantially upgrade our image as a producer of quality products?
The need to reduce the costs to process the vegetables used in producing goulash
Issuing corporate stock for the funds to purchase new equipment
Responses:
Implement the Decision, Evaluate Performance, and Learn
Identify Projects
Make Decisions by Choosing Among Alternatives
Make Predictions
Obtain Information
Correct Answer:
Premises:
Responses:
Monitoring the costs to operate a new machine
Use of the internal rate of return for each alternative
Estimating yearly cash flows and setting investment budgets accordingly using a 12-year planning horizon.
Percentage of defective merchandise considered too high
Learning how to effectively operate Machine #8 only takes 15 minutes
Tracking realized cash flows and comparing against estimated numbers.
Will introducing the new product substantially upgrade our image as a producer of quality products?
The need to reduce the costs to process the vegetables used in producing goulash
Issuing corporate stock for the funds to purchase new equipment
Premises:
Monitoring the costs to operate a new machine
Use of the internal rate of return for each alternative
Estimating yearly cash flows and setting investment budgets accordingly using a 12-year planning horizon.
Percentage of defective merchandise considered too high
Learning how to effectively operate Machine #8 only takes 15 minutes
Tracking realized cash flows and comparing against estimated numbers.
Will introducing the new product substantially upgrade our image as a producer of quality products?
The need to reduce the costs to process the vegetables used in producing goulash
Issuing corporate stock for the funds to purchase new equipment
Responses:
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