The procedure whereby management plans, evaluates, and controls long-term investment decisions involving resolved assets

Capital investment analysis

Decisions to install brand-new tools, rearea old devices an purchase or construct a brand-new building are examples of:

d. All of the above

Which of the complying with is vital once evaluating long term investments? a. Investments must earn a reasonable price of return b. Employees are able to determine and also propose capital equipment for their departments or departments c. Proposals should enhance lengthy term goal d. every one of the above

Net present worth and also internal rate of return

Which of the following are present value techniques of analyzing funding investment proposals?

Net present value

Which of the adhering to is a existing worth approach of analyzing capital investment proposals?

has a time value

By converting dollars to be received later into present dollars, the present worth approaches take right into consideration that money:

Mean rate of rerevolve and also cash payback method

Which of the complying with are 2 methods of analyzing analyzing funding investment proposals that both disregard current value?

Mean price of rerotate method

The method of analyzing capital investment proposals that divides the estimated average annual earnings by the average investment is

It emphasizes the amount of earnings earned over the life of the proposal

The main benefits of the average price of return technique are its ease of computation and the reality that:

Net existing value

Which strategy for evaluating funding investment proposals reduces the meant future net cash flows originating from the proposals to their present worths and also computes a net current value?

Present out value index

Which of the complying with can be provided to area funding investment proposals including different amounts of investment on a comparable basis for objectives of net present value analysis?

The proposal is preferable and the price of return intended from the proposal exceeds the minimum price used for the analysis

An evaluation of a proposal by the net existing value technique suggested that the current worth of future cash inflows surpassed the amount to be invested. Which of the following statements finest describes the results of this analysis?

Internal price of return

Which method of evaluating capital investment proposals uses the concept of current worth to compute a price of return?

Typical rate of return

Which of the complying with is a method of analyzing funding investment proposals that ignores present value?

Methods that disregard existing value

The techniques of evaluating funding investment proposals deserve to be separated right into two basic groups – present worth approaches and

Present value index

When a number of different investment proposals of the same amount are being taken into consideration, the one via the biggest net existing worth is the most preferable. If the alternate proposals involve different quantities of investment, it is advantageous to prepare a family member ranking of the proposals by making use of a:

Internal rate of return

Which strategy of evaluating resources investment proposals uses existing worth concepts to compute the rate of return from the net cash flows expected from resources investment proposals?

Annuity

A series of equal cash flows at fixed intervals is termed an:

Total present worth of net cash flow/amount to be invested

The current worth index is computed utilizing which of the adhering to formulas?

Amount to be invested/annual net cash flow

The current value factor for an annuity of $1 is established utilizing which of the adhering to formulas?

It takes right into consideration the time worth of money

Which of the complying with is not an benefit of the average price of rerotate method?

It is easy to use

Which of the following is an benefit of the cash payago method?

a. The much longer the payback, the much longer the estimated life of the asset

The cash payback strategy is widely provided in evaluating investments. The adhering to are reasons why this technique is offered except: a. the longer the payearlier, the much longer the estimated life of the ascollection b. the shorter the payago, the sooner the cash spend on the investment is recovered. c. The shorter the payback, the leastern likely the possibility of obsolescence. d. All of the above is correct

b. production sunk cost

All of the adhering to qualitative considerations may affect upon resources investments evaluation except: a. production productivity b. production sunk price c. manufacturing flexibility d. production control

a. time worth of money

All of the adhering to qualitative considerations may affect upon resources investment evaluation except: a. time value of money b. employee morale c. the influence on product high quality d. production flexibility

depreciation deduction

Which of the adhering to provisions of the Internal Revenue Code have the right to be supplied to reduce the amount of the income tax expense emerging from capital investment projects?

Adjust the life of Proposal J to a time period that is equal to that of Proposal F by estimating a residual worth at the end of year six

Assume in analyzing alternate proposals that Proposal F has actually a advantageous life of 6 years and Proposal J has a useful life of 9 years. What is one commonly supplied technique that provides the proposals comparable?

Inflation

Periods in time that suffer raising price levels are recognized as periods of:

Equal proposal lives

Which of the adhering to is not considered as a complicating element in resources investment decisions?

Using just quantitative measures to purchase an asset

Which of the following would not be taken into consideration an excellent managerial tool in making a decision for determining a funding investment?

Sunk cost

All of the following are components that may complicate resources investment analysis except:

Capital rationing

The process by which management allocates obtainable investment funds among completing investment proposals is called

Cash payago approach and average price of return method

In funding rationing, an initial screening of alternate proposals is generally performed by establishing minimum requirements. Which of the adhering to testimonial method(s) are regularly used?

Non-financial factors

In capital rationing, alternate proposals that endure initial and second screening are typically evaluated in terms of:

Determines whether the project have to be funded by using operating cash or issuance of bonds

Capital rationing provides the complying with measures to recognize the funding of jobs except:

True

The procedure whereby a management plans, evaluates, and controls irreversible investment decisions involving resolved assets is called funding investment analysis.

You are watching: All of the following qualitative considerations may impact capital investments analysis except

True

Care have to be taken involving capital investment decisions, considering that generally a irreversible committment of funds is associated and also operations could be affected for many kind of years.

True

The strategy sof evaluating funding investment proposals deserve to be grouped right into 2 general categories that have the right to be described as (1) approaches that neglect existing worth and (2) present value methods.

True

Mean price of return amounts to approximated average yearly revenue divided by the average investment.

True

The approach of analyzing resources investment proposals in which the estimated average annual revenue is divided by the average investment is the average price of return strategy.

True

The excess of cash flowing in from earnings over the cash flowing out for expenses is termed net cash flow

True

The computations associated in the net current value method of analyzing resources investment proposals are even more associated than those for the average price of return technique.

True

Methods that ignore current worth in funding investment analysis incorporate the cash payback method

True

Methods that ignore current worth in resources investment analysis encompass the average price of rerotate method

True

The meant duration of time that will elapse between the date of a capital investment and also the complete recoextremely in cash of the amount invested is referred to as the cash payearlier period.

True

In net existing worth evaluation for a proposed capital investment, the expected future net cash flows are decreased to their current values

True

If in evaluating a proposal by usage of the net existing worth method, tbelow is a deficiency of the present value of future cash inflows over the amount to be invested, the proposal need to be rejected

True

If in evaluating a proposal by use of the net current value method there is an excess of the present worth of future cash inflows over the amount to be invested, the price of rerevolve on the proposal exceeds the rate provided in the analysis

True

A present worth index deserve to be offered to rank completing capital investment proposals once the net current value approach is offered.

True

The inner price of return technique of analyzing capital investment proposals offers the present value principle to compute an interior rate of return intended from the proposals.

True

A series of equal cash flows at fixed intervals is termed an annuity

True

A qualitative characteristic that might affect upon funding investment analysis is the influence of investment proposals on product quality

True

A qualitative characteristic that may impact upon funding investment analysis is production flexibility

True

A qualitative characteristic that may influence upon funding investment analysis is employee morale

True

A qualitative characteristic that may impact upon resources investment analysis is manufacturing productivity

True

A qualitative characteristic that might impact upon capital investment analysis is production control

True

The procedure whereby monitoring allocates obtainable investment funds among competing resources investment proposals is termed capital rationing

True

A resources expenditures budget summarizes the decisions made for the acquisition of solved assets for numerous future years.

False

The procedure by which management plans, evaluates, and controls long-term investment decisions including solved assets is referred to as cost-volume-profit evaluation.

False

Only supervisors are encouraged to submit funding investment proposals bereason they recognize the procedures and are able to enhance investments via permanent goals

False

The approaches of evaluating capital investment proposals have the right to be grouped into two basic categories that deserve to be described as (1) average price of return (2) cash payago method

False

Typical rate of rerotate equals average investment split by approximated average yearly income

False

The excess of cash flowing in from earnings over the cash flowing out for prices is termed net discounted cash flow.

False

The computations associated in the net current value strategy of analyzing capital investment proposals are less affiliated than those for the average rate of return approach.

False

Methods that neglect existing worth in resources investment evaluation include the inner price of rerotate method

False

Methods that ignore existing value in funding investment analysis include the net existing value method

False

The average rate of rerotate strategy of capital investment evaluation gives consideration to the existing worth of future cash flows

False

The cash payearlier technique of capital investment evaluation is just one of the methods referred to as a current worth technique.

False

In net present worth analysis for a proposed resources investment, the supposed future net cash flows are averaged and also then reduced to their current values.

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False

The meant duration of time that will certainly elapse in between the date of a capital investment and the finish recoexceptionally in cash of the amount invested is referred to as the discount duration.

False

If in evaluating a proposal by use of the net present worth strategy there is a deficiency of the existing worth of future cash inflows over the amount to be invested, the proposal should be accepted

False

If in evaluating a proposal by use of the net current worth method tright here is an excess of the current worth of future cash inflows over the amount to be invested, the rate of return on the proposal is much less than the rate used in the analysis

False

Charitable contributions are often supplied as a means of reducing the amount of income taxation price developing from funding investment projects

False

The procedure through which monitoring allocates available investment funds among completing capital investment proposals is termed present value analysis

False

Capital rationing is the process by which administration decides just how to divide the funding budgain among the various departments or divisions in the company