• How do capital expenditures differ from ordinary expenditures?
• What effects can capital-budgeting decisions have on a company?
• What effect does depreciation have on cash flow?
• Give an example of an out-of-pocket cost and a sunk cost by describing a situation in which both are encountered.
• A machine is being considered for purchase. The salesperson attempting to sell the machine says that it will pay for itself in five years. What is meant by this statement?