1) Life cycle costing is the accounting system that corresponds to

A) the non-financial dimension of costs analysis. B) the project dimension of costs analysis.

C) the cost dimension of costs analysis.

D) the financial dimension of costs analysis.

E) the time dimension of costs analysis.

2) Which of the following is NOT a part of the capital budgeting decision process model?

A) Determine which investment yields the greatest benefit and the least cost to the organization

B) Track realized cash flows, compare against estimated numbers, and revise plans if necessary.

C) Forecast all potential cash flows attributable to the alternative projects.

D) Manage the control of non-quantitative factors.

E) Identify potential capital investments that agree with the organization's strategy.

3) In selecting capital projects, organizations choose

A) the alternative that matches the RRR.

B) the alternative that has revenues that exceed its costs.

C) the alternative that has the highest revenues.

D) the alternative that has the longest time horizon, but also exceeds the RRR.

E) the alternative that provides benefits that exceed predicted costs by the greatest amount.

4) The discount rate, hurdle rate, or (opportunity) cost of capital all refer to the

A) required rate of return.

B) internal rate of return.

C) net present value.

D) discounted cash flow.

E) payback period.

5) When the present value of expected cash inflows from a project equals the present value of expected

cash outflows of a project, the discount rate is the

A) universal rate.

B) internal rate of return.

C) required rate.

D) net present value rate.

E) inflation rate.

6) Brown Corporation recently purchased a new machine for $339,013.20. The new equipment has a

useful life of 10 years. Net cash flows will be $60,000 per year, end of year payments.

What is the internal rate of return?

A) 10 percent

B) 12 percent

C) 14 percent

D) 16 percent

E) 18 percent

7) In NPV analysis, if the IRR exceeds the RRR

A) the project should be rejected.

B) the NPV will be negative (when discounted at the IRR).

C) the NPV is positive when project cash flows are discounted at the IRR.

D) the NPV is positive when project cash flows are discounted at the RRR.

E) the NPV is negative when project cash flows are discounted at the RRR.

8) A capital proposal is projected to result in annual savings of $25,000. What is the after-tax cash flow if

the tax rate is 35%?

A) $25,000

B) $16,250

C) $8,750

D) $7,500

E) $33,750

9) In capital budgeting decisions, relevant cash flows

A) are actual cash flows that differ between alternatives.

B) are actual cash flows that do not differ between alternatives.

C) are expected future cash flows that differ between alternatives.

D) are expected future cash flows that do not differ between alternatives.

E) are past cash flows lost.