CAPITAL BUDGETING

Which are the correct answers?

Replacement decision A. The decision rule for this capital budgeting method states a project should be considered acceptable if the difference between its discounted cash inflows and cost is positive Net present value B. The process of planning and evaluating expenditures on assets whose cash flows are expected to extend beyond one year. NPV profile C. A capital budgeting analysis that determines if a capital asset should be purchased to take the place of a worn out, damaged, or obsolete existing asset NPV profile D. The acceptance or rejection decision made for this type of project does not affect the acceptance or rejection of another proposed capital project. Internal rate or return E. This analysis involves a comparison of the expected and actual results for a given capital project and the development of an explanation for any disparity between them. Capital budgeting F. This capital budgeting technique calculates a discount rate that should be compared to a firm's cost of capital to determine whether a capital project should be accepted or rejected. Independent project G. A term used to describe a firm's cost of capital; this value is used as the hurdle against which a project's internal rate of return is compared to ascertain whether a project is acceptable. Payback period H. A graph that illustrates the relationship between a project's net present value (NPV) calculated at a range of hurdle rates. Required rate of return I. The decision rule for this capital budgeting method states a project should be considered acceptable if its calculated return is greater than or equal to the firm's cost of capital. Modified internal rate of return. J. This analytical technique is less reliable for identifying acceptable projects as it ignores the time value of money