Master and Reinforce It!
(1 pt. each)
1. Capital budgeting is the process
a. Used in make-or-buy decision making
b. Of eliminating unprofitable product line
c. Of making capital expenditure decisions
d. Of determining how much capital stock is issued
2. A project’s salvage value, realizable at the end of life of the project, is considered in the
computation of the project’s net Investments for decision-making purposes. True or False.
3. The payback period emphasizes the profitability of a capital project while the accounting rate
of return on the other hand, emphasizes the project’s liquidity. True or False.
4. Annual cash inflows from the capital projects are measured in terms of
a. Income after depreciation and taxes
b Income before depreciation and taxes
c. Income before depreciation but after taxes
MARI
