1. Why are present values, taxes and interest rates of such importance in Capital Budgeting? What is the tax shield on CCA? Why is it important?

2. What is the purpose of Ratio Analysis? List two of the groups of people inside or outside the organization who use it, and state what kind of information they each derive from it, and for what purpose.

3. In order to make good decisions, management must be aware of which costs are relevant costs for decision making. For this reason, it is important to recognize how certain costs behave under changing conditions. Give one example of a situation in which a fixed costs may be relevant and one when a fixed cost may not be relevant. Give an example of when a variable cost might not be relevant.