ACG 3351 Week 12 Quiz (Everest)

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ACG 3351 Week 12 Quiz (Everest)

1. Capital budgeting focuses on projects over their entire lives in order to consider all the cash flows or cash savings from investing in a single project. (Points : 5)

2. The identification stage of capital budgeting explores alternative capital investments that will achieve the objectives of the organization. (Points : 5)

3. Internal rate of return is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time. (Points : 5)

4. The selection stage of the capital budgeting process consists of choosing projects for possible implementation. (Points : 5)

5. Discounted cash flow methods measure all the expected future cash inflows and outflows of a project as if they occurred at equal intervals over the life of the project. (Points : 5)

6. Discounted cash flow methods focus on operating income. (Points : 5)

7. Deducting depreciation from operating cash flows would result in counting the initial investment twice in the discounted cash flow analysis. (Points : 5)

8. The payback method is only useful when the expected cash flows in the later years of the project are highly uncertain. (Points : 5)

9. Relevant cash flows are expected future cash flows that differ among the alternative uses of investment funds. (Points : 5)

10. A manager who uses discounted cash flow methods to make capital budgeting decisions does not face goal-congruence issues if the accrual accounting rate of return is used for performance evaluation. (Points : 5)