CHAPTER_12_CAPITAL_BUDGETING_DECISION_RULES

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1、CHAPTER12—CAPITALBUDGETING:DECISIONRULES1. Afirmshouldneveracceptaprojectifitsacceptancewouldleadtoanincreaseinthefirm'scostofcapital(itsWACC). a. True b. FalseANSWER:  FalsePOINTS:  1DIFFICULTY:  Difficulty:EasyLEARNING OBJECTIVES:  INTE.GENE.16.78-LO:12-1NATIONAL STANDARDS:  UnitedStates-BUSPROG:

2、ReflectiveThinkingSTATE STANDARDS:  UnitedStates-AK-DISC:Capitalbudgetingandcost-DISC:CapitalbudgetingandcostofcapitalLOCAL STANDARDS:  UnitedStates-OH-DefaultCity-TBATOPICS:  CapitalbudgetKEYWORDS:  Bloom’s:Knowledge2. Because"presentvalue"referstothevalueofcashflowsthatoccuratdifferentpointsintim

3、e,aseriesofpresentvaluesofcashflowsshouldnotbesummedtodeterminethevalueofacapitalbudgetingproject. a. True b. FalseANSWER:  FalsePOINTS:  1DIFFICULTY:  Difficulty:EasyLEARNING OBJECTIVES:  INTE.GENE.16.79-LO:12-3NATIONAL STANDARDS:  UnitedStates-BUSPROG:ReflectiveThinkingSTATE STANDARDS:  UnitedSta

4、tes-AK-DISC:Capitalbudgetingandcost-DISC:CapitalbudgetingandcostofcapitalLOCAL STANDARDS:  UnitedStates-OH-DefaultCity-TBATOPICS:  PVofcashflowsKEYWORDS:  Bloom’s:Knowledge3. AssumingthattheirNPVsbasedonthefirm'scostofcapitalareequal,theNPVofaprojectwhosecashflowsaccruerelativelyrapidlywillbemorese

5、nsitivetochangesinthediscountratethantheNPVofaprojectwhosecashflowscomeinlaterinitslife. a. True b. FalseANSWER:  FalsePOINTS:  1DIFFICULTY:  Difficulty:EasyLEARNING OBJECTIVES:  INTE.GENE.16.79-LO:12-3NATIONAL STANDARDS:  UnitedStates-BUSPROG:ReflectiveThinkingSTATE STANDARDS:  UnitedStates-AK-DIS

6、C:Capitalbudgetingandcost-DISC:CapitalbudgetingandcostofcapitalLOCAL STANDARDS:  UnitedStates-OH-DefaultCity-TBATOPICS:  NPVKEYWORDS:  Bloom’s:KnowledgeCengageLearningTesting,PoweredbyCogneroPage 61CHAPTER12—CAPITALBUDGETING:DECISIONRULES4. Abasicruleincapitalbudgetingisthatifaproject'sNPVexceedsit

7、sIRR,thentheprojectshouldbeaccepted. a. True b. FalseANSWER:  FalsePOINTS:  1DIFFICULTY:  Difficulty:EasyLEARNING OBJECTIVES:  INTE.GENE.16.79-LO:12-3NATIONAL STANDARDS:  UnitedStates-BUSPROG:ReflectiveThin