#2 and #4

mutually exclusive 389 reinvestment assumption 390 modified internal rate of return asset depreciation range (ADR) replacement decisions 400 incremental depreciation 403 elective expensing 404 397 (MIRR) 391 DISCUSSION QUESTIONS 1. What are the important administrative considerations in the capital budgeting process? (LO12-1) Why does capital budgeting rely on analysis of cash flows rather than on net income? (LO12-2) What are the weaknesses of the payback methed? (L012-3) What is normally used as the discount rate in the net present value method? (LO12-5) What does the term mutually exclusive invesiments mean? (LO12-4) How does the modified internal rate of return include concepts from both the traditional internal rate of return and the net present value methods? (LO12-4) If a corporation has projects that will earn more than the cost of capital, should it ration capital? (LO12-5) What is the net present value profile? What three points should be determined to graph the profile? (LO12-4) How does an asset's ADR (asset depreciation range) relate to its MACRS category? (LO12-2) 2. 3. 4. 5. 6. 7. 8. 9