True / False Questions (2 points each /Total 22 points) Circle True or False 1.

Question

True / False Questions (2 points each /Total 22 points) Circle True or False 1. Actual dollars are estimates of present cash flows for a year and take into account any anticipated changes in amounts caused by inflation. True/ False 2. Risk Simulations are employed when analytical methods cannot be easily used. True / False 3. Working capital requirements differ according to the nature of the investment projedt. True / False 4. There are three approaches used in making replacement decisions. They include: Cash Flow, Opportunity Costs, and Retained Earnings. True / False 5. Constant dollar analysis is common in the evaluation of many long-term public projects, because government do not pay income taxes. True / False 6. Interest payment is a tax-deductible expense True/ False

Explanation / Answer

1. True

Explanation: Actual dollars take inflation rate into consideration; whereas nominal dollars only take the current dollar amount and ignores the inflation rate.

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