Generally the least expensive source of long-term capital is A) retained earning
ID: 2707246 • Letter: G
Question
Generally the least expensive source of long-term capital is
A) retained earnings.
B) preferred stock.
C) long-term debt.
D) short-term debt.
As the volume of financing increases, the costs of the various types of financing will ________, ________ the firm's weighted average cost of capital.
A) increase, lowering
B) increase, raising
C) decrease, lowering
D) decrease, raising
The most common motive for adding fixed assets to the firm is
A) expansion.
B) replacement.
C) renewal.
D) transformation.
The final step in the capital budgeting process is
A) implementation.
B) follow-up.
C) re-evaluation.
D) education.
The first step in the capital budgeting process is
A) review and analysis.
B) implementation.
C) decision-making.
D) proposal generation.
A $60,000 outlay for a new machine with a usable life of 15 years is called
A) capital expenditure.
B) operating expenditure.
C) replacement expenditure.
D) none of the above.
A capital expenditure is all of the following EXCEPT
A) an outlay made for the earning assets of the firm.
B) expected to produce benefits over a period of time greater than one year.
C) an outlay for current asset expansion.
D) commonly used to expand the level of operations.
All of the following are motives for capital budgeting expenditures EXCEPT
A) expansion.
B) replacement.
C) renewal.
D) invention.
________ projects do not compete with each other; the acceptance of one ________ the others from consideration.
A) Capital; eliminates
B) Independent; does not eliminate
C) Mutually exclusive; eliminates
D) Replacement; does not eliminate
________ projects have the same function; the acceptance of one ________ the others from consideration.
A) Capital; eliminates
B) Independent; does not eliminate
C) Mutually exclusive; eliminates
D) Replacement; does not eliminate
A firm with limited dollars available for capital expenditures is subject to
A) capital dependency.
B) mutually exclusive projects.
C) working capital constraints.
D) capital rationing.
A conventional cash flow pattern associated with capital investment projects consists of an initial
A) outflow followed by a broken cash series.
B) inflow followed by a broken series.
C) outflow followed by a series of inflows.
D) inflow followed by a series of outflows.
A non-conventional cash flow pattern associated with capital investment projects consists of an initial
A) outflow followed by a series of both cash inflows and outflows.
B) inflow followed by a series of both cash inflows and outflows.
C) outflow followed by a series of inflows.
D) inflow followed by a series of outflows.
________ is a series of equal annual cash flows.
A) A mixed stream
B) A conventional
C) A non-conventional
D) An annuity
Which of the following capital budgeting techniques ignores the time value of money?
A) Payback.
B) Net present value.
C) Internal rate of return.
D) Two of the above.
All of the following are weaknesses of the payback period EXCEPT
A) a disregard for cash flows after the payback period.
B) only an implicit consideration of the timing of cash flows.
C) the difficulty of specifying the appropriate payback period.
D) it uses cash flows, not accounting profits.
Sophisticated capital budgeting techniques do not
A) examine the size of the initial outlay.
B) use net profits as a measure of return.
C) explicitly consider the time value of money.
D) take into account an unconventional cash flow pattern.
The ________ is the discount rate that equates the present value of the cash inflows with the initial investment.
A) payback period
B) average rate of return
C) cost of capital
D) internal rate of return
When making replacement decisions, the development of relevant cash flows is complicated when compared to expansion decisions, due to the need to calculate ________ cash inflows.
A) conventional
B) non-conventional
C) incremental
D) initial
Cash outlays that had been previously made and have no effect on the cash flows relevant to a current decision are called
A) incremental historical costs.
B) incremental past expenses.
C) opportunity costs foregone.
D) sunk costs.
I'm trying to verify if my answers are correct, or at least close...and where I still have to study.
Explanation / Answer
1.Generally the least expensive source of long-term capital is
A) retained earnings.
B) preferred stock.
C) LONG-TERM DEBT
D) short-term debt.
2.As the volume of financing increases, the costs of the various types of financing will ________, ________ the firm's weighted average cost of capital.
B) increase, raising
3.The most common motive for adding fixed assets to the firm is
A) expansion.
4.The final step in the capital budgeting process is
C) re-evaluation/post audit analysis
5.The first step in the capital budgeting process is
D) proposal generation.
6.A $60,000 outlay for a new machine with a usable life of 15 years is called
A) capital expenditure.
7.A capital expenditure is all of the following EXCEPT
A) an outlay made for the earning assets of the firm.
B) expected to produce benefits over a period of time greater than one year.
C) an outlay for current asset expansion.
D) commonly used to expand the level of operations.
8.All of the following are motives for capital budgeting expenditures EXCEPT
D) invention.
9.________ projects do not compete with each other; the acceptance of one ________ the others from consideration.
B) Independent; does not eliminate
10.________ projects have the same function; the acceptance of one ________ the others from consideration.
C) Mutually exclusive; eliminates
11.A firm with limited dollars available for capital expenditures is subject to
D) capital rationing.
12.A conventional cash flow pattern associated with capital investment projects consists of an initial
C) outflow followed by a series of inflows.
13.A non-conventional cash flow pattern associated with capital investment projects consists of an initial
A) outflow followed by a series of both cash inflows and outflows.
14.________ is a series of equal annual cash flows.
C) A non-conventional FLOW
15.Which of the following capital budgeting techniques ignores the time value of money?
B) Net present value.
16.All of the following are weaknesses of the payback period EXCEPT
D) it uses cash flows, not accounting profits.
17.Sophisticated capital budgeting techniques do not
C) EXPLICITLY CONSIDER THE TIME VALUE OF MONEY.
18.The ________ is the discount rate that equates the present value of the cash inflows with the initial investment.
D) INTERNAL RATE OF RETURNS.
19.When making replacement decisions, the development of relevant cash flows is complicated when compared to expansion decisions, due to the need to calculate ________ cash inflows.
C) INCREMENTAL
20.Cash outlays that had been previously made and have no effect on the cash flows relevant to a current decision are called
D) SUNK COSTS.
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