1) Capital budgeting involves, A) budgeting for yearly operational expenses B) preparing the sales budget for the coming year C) deciding among various long-term investments D) analyzing various alternatives of financing available to a company 2) The last step in the capital budgeting process is control, which compares the actual results with the projected results. These comparisons are known as, A) net cash inflows B) post-audits C) rankings D) variance analysis 3) When comparing several investments with the same initial cost, the decision should be made on the basis of the A) highest total cash inflows B) longest payback period C) highest NPV D) highest ARR 4) The following details are provided by a manufacturing company: Product line $1,100,000 12 years $400,000 $390,000 $380,000 $70,000 Straight-line 14% Investment Useful life Estimated annual net cash inflows for first year Estimated annual net cash inflows for second year Estimated annual net cash inflows for next ten years Residual value Depreciation method Required rate of return Calculate the payback period for the investment. (Round your answer to two decimal places.) A) 2.75 years B) 2.82 years C)2.55 years D) 2.77 years 5) Which capital budgeting method uses accrual accounting, rather than net cash flows, as a basis for calculations? A) payback B) accounting rate of return C) net present value D) internal rate of return