1.Are sunk costs relevant or irrelevant to the capital budgeting decision?What about opportunity cost?

2.Your factory overhead will increase from $100,000 to $140,000 if you take on a new project.How much should be included in the operating cash flows for this new project? And would this be an outflow or an inflow.

3.I bought my car for 28,000 five years ago, it is now worth 18,000 (net of selling expenses).I want to use my car in a new taxi business that I am starting.What is the correct opportunity cost that should be used in calculating the NPV of my taxi service?

4.You placed a piece of equipment with a 5 year tax life into service on July 1^st of 2017. What depreciation rate would you use for 2018 and 2019?

5.Per IRS rules, over how many years do you use to depreciate commercial buildings? And how many for residential buildings? And how many for land(not land improvements)?

6.Your accounts receivables balance was $80,000 on 12/31/2016 and was $60,000 on 12/31/2017.Was this decrease in accounts receivables a source or use of cash? Pick one.

7.Your accounts payable balance was $80,000 on 12/31/2016 and was $60,000 on 12/31/2017.Was this decrease in accounts payable a source or use of cash? Pick one.

8.You have $60,000 in cash, $40,000 in accounts receivable, $100,000 in inventory, $65,000 in accounts payable, $25,000 in accrued expenses on 12/31/2017.What was your net working capital balance on this date?

9.You operated your business this year and calculated a net income after tax of $100,000.When calculating this net income you subtracted $35,000 in depreciation to get the $100,000 net income amount.If this was you only noncash operating expense, what in you operating cash flows for the year?

10.You are opening a new restaurant and built a new store and fitted out the restaurant with ovens, stoves, tables and other equipment.In what year do you model the expenditure for the building?The equipment?