A behavioral approach that evaluates the impact on the firm's return of simultaneous changes in a number of project variables is called

sensitivity analysis

scenario analysis

simulation analysis

All of the above.

A $60,000 outlay for a new machine with a usable life of 15 years is called

capital expenditure

operating expenditure

replacement expenditure

None of the above.

A corporation is evaluating the relevant cash flows for a capital budgeting decision and must estimate the terminal cash flow. The proposed machine will be disposed of at the end of its usable life of five years at an estimated sale price of $2,000. The machine has an original purchase price of $80,000, installation cost of $20,000, and will be depreciated under the five-year MACRS. Net working capital is expected to decline by $5,000. The firm has a 40 percent tax rate on ordinary income and long-term capital gain. The terminal cash flow is

$5,800

$7,800

$8,200

$6,200