c. The initial investment 25. The regular payback period is defined as the number of years required to recover a project's cost. It does not consider: a. Risk and return b. The time value of money c. Current interest rates 26. The most important and most difficult step in analyzing a capital budgeting project is estimating: a. The opportunity costs b. Externalities c. The incremental after-tax cash flow 27. Which of the following is not included in a project's net cash flow a. Cash outlays for fixed assets b. Interest payments c. The tax shield provided by depreciation 28. Investment in an expansion project: a. Protects market share b. Generates new sales c. Reduces operating costs 29. Investment in a replacement project: a. Protects market share and/or reduces operating costs b. Generates new sales c. Is a waste of capital 30. Risk is important to capital budgeting because it effects: a. The estimated after-tax cash flows the project will produce b. The tax shield provided by depreciation c. The discount rate also called the weighted average cost of capital 31. The three types of risk affecting capital budgeting are stand-alone risk, corporate risk and: a. Market risk b. Economic risk c. Global risk 32. Market risk is the most important risk because it affects stock prices and it is: a. The most difficult to measure b. The casiest to measure c. Not able to be measured 33. Three ways to measure stand-alone risk in capital budgcting are Monte Carlo Simulation, Sensitivity