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NEW QUESTION: 1
A. Option B
B. Option A
C. Option C
D. Option D
E. Option E
Answer: A,D
NEW QUESTION: 2
In evaluating a capital budget project, the use of the net present value model is generally not affected by
the:
A. Amount of added working capital needed for operations during the term of the project.
B. Initial cost of the project.
C. Method of funding the project.
D. Amount of the project's associated depreciation tax allowance.
Answer: C
Explanation:
Choice "a" is correct. The method of funding the project has no effect on the net present value model.
NPV uses a hurdle rate to discount cash flows. If the NPV is positive, the project is acceptable. The
method of financing the project, and the cost, are independent of the process of screening the project for
acceptability. Choice "b" is incorrect. The initial cost is one of the most important items in the calculation of
NPV. Choice "c" is incorrect. Added working capital requirements and salvage value affect cash flow. All
cash flows are used in the NPV model. Choice "d" is incorrect. The tax depreciation allowance will provide
a "tax shield" or tax savings that impacts cash flow and must be considered in NPV analysis.
NEW QUESTION: 3
Which of the following tasks should you not perform with your processes?
A. Monitor them
B. Ignore them
C. Optimize them
D. Design them
Answer: B
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