1 1) ?

'ic' of t'e following is

not
an advantage of post#audits of capital investments@A) &'ey indicate w'et'er pro ect s'ould
continue or s'ould e a andoned.$) &'ey 'elp managers ma(e etter estimates for future
pro ects.C) &'ey encourage managers to su mit realistic net cas' inflows wit' t'eir pro ect
proposals. ) &'ey 'elp managers to decide w'ic' pro ect s'ould e selected.Answer:
iff: 1L!:
1"#/E!C: E1"#+/AACS$: Analytical &'in(ingLearning !utcome: iscuss t'e asics of capital
investments and illustrate t'e time value of money concepts1 ") &'e BBBBBBBB capital
udgeting model considers ot' profita ility and t'e time value of money.A) pay ac( $) net
present valueC) accounting rate of return ) $ot' a and c are correctAnswer: $ iff: 1L!: 1"#/E!C:
E1"#+/AACS$: Analytical &'in(ingLearning !utcome: iscuss t'e asics of capital investments
and illustrate t'e time value of money concepts. Calculate t'e =0>4 internal rate of return4
pay ac( period4 and accounting rate of return and use to evaluate a potential investment.1 +)
&'e BBBBBBBB capital udgeting model is generally t'e simplest to compute.A) accounting
rate of return$) net present valueC) internal rate of return ) pay ac( Answer:
iff: 1L!:
1"#/E!C: E1"#+/AACS$: %eflective &'in(ingLearning !utcome: iscuss t'e asics of capital
investments and illustrate t'e time value of money concepts. Calculate t'e =0>4 internal rate of
return4 pay ac( period4 and accounting rate of return and use to evaluate a potential
investment.
-Copyrig't 7 "61+ 0earson Education4 8nc. pu lis'ing as 0rentice 9all

1
) ?'ic' of t'e capital udgeting met'ods is t'e est@A) 0ay ac( period$) =et present valueC)
8nternal rate of return ) =o single met'od is est. Answer:
iff: "L!: 1"#/E!C: E1"#+/AACS$:
%eflective &'in(ingLearning !utcome: iscuss t'e asics of capital investments and illustrate t'e
time value of money concepts. Calculate t'e =0>4 internal rate of return4 pay ac( period4 and
accounting rate of return and use to evaluate a potential investment.1 /) &'e BBBBBBBB
capital udgeting met'ods are ased on cas' flows4 profita ility4 and t'e time value of
money.A) pay ac( and accounting rate of return$) pay ac( and net present valueC) net present
value and internal rate of return ) accounting rate of return and internal rate of returnAnswer:
C iff: "L!: 1"#/E!C: E1"#+/AACS$: %eflective &'in(ingLearning !utcome: iscuss t'e asics
of capital investments and illustrate t'e time value of money concepts. Calculate t'e =0>4 internal
rate of return4 pay ac( period4 and accounting rate of return and use to evaluate a potential
investment.1 -) &'e BBBBBBBB is generally considered to e t'e most superior met'od for
ma(ing capital udgeting decisions.A) accounting rate of return met'od$) net present value
met'odC) pay ac( met'od ) incremental met'odAnswer: $ iff: "L!: 1"#/E!C: E1"#+/AACS$:
Analytical &'in(ingLearning !utcome: iscuss t'e asics of capital investments and illustrate t'e

time value of money concepts. Calculate t'e =0>4 internal rate of return4 pay ac( period4 and
accounting rate of return and use to evaluate a potential investment.
2Copyrig't 7 "61+ 0earson Education4 8nc. pu lis'ing as 0rentice 9all

1 2) Kanagement s minimum desired rate of return on an investment is est descri ed y

w'ic' of t'e following terms@A) 0ay ac( return$) 8nternal rate of return C) iscount rate ) =et
present valueAnswer: C iff: 1L!: 1"#/E!C: E1"#+/AACS$: Analytical &'in(ingLearning
!utcome: iscuss t'e asics of capital investments and illustrate t'e time value of money
concepts1
) A measure of profita ility computed y dividing t'e average annual operating
income y t'e amount of t'e investment is est descri ed y w'ic' of t'e following terms@A)
=et present value $) iscount rateC) 8nternal rate of return ) Accounting rate of returnAnswer:
iff: 1L!: 1"#/E!C: E1"#+/AACS$: %eflective &'in(ingLearning !utcome: iscuss t'e asics
of capital investments and illustrate t'e time value of money concepts. Calculate t'e =0>4 internal
rate of return4 pay ac( period4 and accounting rate of return and use to evaluate a potential
investment.1 ;) &'e rate of return t'at ma(es t'e =0> of a capital pro ect equal to <ero is
est descri ed y w'ic' of t'e following terms@A) Accounting rate of return$) 8nternal rate of
returnC) iscount rate ) =et present valueAnswer: $ iff: 1L!: 1"#/E!C: E1"#+/AACS$:
%eflective &'in(ingLearning !utcome: iscuss t'e asics of capital investments and illustrate t'e
time value of money concepts. Calculate t'e =0>4 internal rate of return4 pay ac( period4 and
accounting rate of return and use to evaluate a potential investment.
Copyrig't 7 "61+ 0earson Education4 8nc. pu lis'ing as 0rentice 9all

1;6) &'e decision model t'at computes t'e difference etween t'e present value of t'e
investment s net cas' inflows4 using a desired rate of return4 and t'e cost of t'e initial
investment is est descri ed y w'ic' of t'e following terms@A) Accounting rate of return$)
iscount rateC) =et present value ) 8nternal rate of return Answer: C iff: 1L!: 1"#/E!C:
E1"#+/AACS$: %eflective &'in(ingLearning !utcome: iscuss t'e asics of capital investments
and illustrate t'e time value of money concepts. Calculate t'e =0>4 internal rate of return4
pay ac( period4 and accounting rate of return and use to evaluate a potential investment.