1) Capital budgeting involves investment in assets whose benefits extend beyond one year in the future. True False 2.) The benefits to be expected from a new project are projected as income flow rather than as cash flows. True Fatse 3) The higher the standard deviation of a normal probability distribution of returns for a security, the riskler that security is when viewed by itself. True. False 4) An asset's depreciable basis for tax purposes equals its cost-plus shipping and installation charges, less its estimated salvage value. True False 5) The Modified Accelerated Cost Recovery System (MACRS) describes allowable accelerated depreciation for tax purposes. False 6) If a stock has a beta of 1.2, its excess return varies less than proportionally to the excess return of the market portfolio. True False 7) Capitalized expenditures are included in the terminal-year incremental net cash flow calculation and excluded from the initial cash outflow calculation for replacement projects. True False 8) Systematic risk affects all securities to varying degrees and cannot be diversified away. True