Quiz Ch 10 – T/F The Importance of What-If Analysis in Capital Budgeting
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: What-if analysis is NOT integral to the process of capital budgeting.
True or false: What-if analysis is NOT integral to the process of capital budgeting.
True or false: “What-if” questions seek to understand how a project will perform under diverse scenarios.
True or false: A roster of suggested investments is found in a capital budget.
True or false: The influence of the time value of money results in the accounting break-even sales volume exceeding the NPV break-even sales volume.
True or false: Corporations usually list expansion options as assets on their balance sheets.
Under U.S. GAAP, companies are not allowed to supplement employee salaries by granting shares of stock instead of cash.
A corporation uses its name rather than the names of its stockholders.
True or false: It is advisable to employ Monte Carlo simulation for obtaining the distribution of Net Present Value (NPV) values in a project.
True or false: Typically, firms should employ their weighted average cost of capital (WACC) to assess capital budgeting projects, as many projects are financed using diverse corporate funds. Yet, if the firm intends to finance a specific project solely with debt or equity, it should use the after-tax cost of that respective capital type for evaluation.
What type of balance does treasury stock have and how does it compare to other stockholders’ equity accounts?