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Chapter 25

30 Questions  I  By Huaccounting
Chapter 25 Assessment

  
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1.  Capital investment analysis is
A.
B.
C.
D.
2.  Which of the following is not true of capital investments?
A.
B.
C.
D.
3.  Which of the following is a method of analyzing capital investment proposals that ignores present value?
A.
B.
C.
D.
4.  Decisions to install new equipment, purchase other businesses, and purchase a new building are examples of
A.
B.
C.
D.
5.  The expected average rate of return for a proposed investment of $600,000 in a fixed asset, with a useful life of four years, straight-line Depreciation, no residual value, and an expected total net income of $216,000 for the 4 years, is:
A.
B.
C.
D.
6.  An anticipated purchase of equipment for $400,000, with a useful life of 8 years and no residual value, is expected to yield the following annual net incomes and net cash flows:What is the cash payback period?
A.
B.
C.
D.
7.  Which of the following is a present value method of analyzing capital investment proposals?
A.
B.
C.
D.
8.  Using the following partial table of present value of $1 at compound interest, determine the present value of $25,000 to be received four years hence, with earnings at the rate of 10% a year:
A.
B.
C.
D.
9.  The management of Arnold Corporation is considering the purchase of a new machine costing $430,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:The net present value for this investment is:
A.
B.
C.
D.
10.  All of the following qualitative considerations may impact upon capital investments analysis except:
A.
B.
C.
D.
11.  Which of the following provisions of the Internal Revenue Code can be used to reduce the amount of the income tax expense arising from capital investment projects?
A.
B.
C.
D.
12.  Assume in analyzing alternative proposals that Proposal A has a useful life of five years and Proposal B has a useful life of eight years. What is one widely used method that makes the proposals comparable?
A.
B.
C.
D.
13.  All of the following are factors that may complicate capital investment analysis except:
A.
B.
C.
D.
14.  Capital rationing involves all of the following except:
A.
B.
C.
D.
15.  Which of the following factors does not have an impact on the outcome of a capital investment decision?
A.
B.
C.
D.
16.  Which of the following is not true of capital investments?
A.
B.
C.
D.
17.  The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called:
A.
B.
C.
D.
18.  Decisions to install new equipment, replace old equipment, and purchase a new building are examples of
A.
B.
C.
D.
19.  Which of the following are two methods of analyzing capital investment proposals that both ignore present value?
A.
B.
C.
D.
20.  The expected average rate of return for a proposed investment of $44,000 in a fixed asset, using straight line Depreciation, with a useful life of 4 years, no residual value, and an expected total net income of $12,320 is:
A.
B.
C.
D.
21.  An anticipated purchase of equipment for $500,000, with a useful life of 8 years and no residual value, is expected to yield the following annual net incomes and net cash flows:What is the cash payback period?
A.
B.
C.
D.
22.  Below is a table for the present value of $1 at Compound interest.Below is a table for the present value of an annuity of $1 at compound interest.Using the tables above, what would be the present value of $15,000 (rounded to the nearest dollar) to be received three years from today, assuming an earnings rate of 6%?
A.
B.
C.
D.
23.  Below is a table for the present value of $1 at Compound interest.Below is a table for the present value of an annuity of $1 at compound interest.Using the tables above, if an investment is made now for $20,000 that will generate a cash inflow of $8,000 a year for the next 4 years, what would be the net present value (rounded to the nearest dollar) of the investment, (assuming an earnings rate of 10%)?
A.
B.
C.
D.
24.  The management of Arnold Corporation is considering the purchase of a new machine costing $420,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:The present value index for this investment is:
A.
B.
C.
D.
25.  All of the following qualitative considerations may impact upon capital investments analysis except:
A.
B.
C.
D.
26.  All of the following qualitative considerations may impact upon capital investments analysis except:
A.
B.
C.
D.
27.  Inflation is:
A.
B.
C.
D.
28.  All of the following are factors that may complicate capital investment analysis except:
A.
B.
C.
D.
29.  Capital rationing uses the following measures to determine the funding of projects except:
A.
B.
C.
D.
30.  In capital rationing, alternative proposals that survive initial and secondary screening are normally evaluated in terms of:
A.
B.
C.
D.
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