Quiz Ch 12 – Accounting for Relative Risk in Project Evaluation
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
The most appropriate way to consider the relative risk of a proposed project is:
The most appropriate way to consider the relative risk of a proposed project is:
Which of the following statements about cannibalization is ACCURATE?
Assuming all other variables remain unchanged, which of the following options would result in an elevation of the NPV for the project under consideration?
Which of the following statements about externalities in project evaluation is TRUE?
Which of these is an IRRELEVANT cash flow and should NOT be considered in a capital budgeting project analysis?
Which of the following statements is ACCURATE regarding externalities and financial evaluation methods?
True or false: The key benefit of employing accelerated depreciation, as opposed to straight-line depreciation, is that it allows for a higher total depreciation amount to be claimed over the full tax life of the asset.
True or false: Cash costs and inflows related to a project can be identified for a company, referred to as “direct inflows and outflows.” The resulting net difference represents the direct net cash flow. Costs and benefits not linked to the firm, but to external parties, are known as externalities and are not obligatory for inclusion in the capital budgeting analysis.
True or false: Externalities that influence a firm’s long-term cash flows should be factored into cash flow estimation.