Which of the following Capital budgeting statements is false? Capital projects i

Question

Which of the following Capital budgeting statements is false? Capital projects involve large amounts of money b. Capital projects are typically hard (or costly) to reverse. c Capital projects and related financing are the source of all wealth to the managers and its employees. 9. Which of the following about Net Present Value is true: a The present value is a series of future economic profits less the initial outlay b Wealth is created to be able to pay creditors. e. Both A and B are true 10. Suppose a toy manufacturer is faced with the following collection of investment projects: a) Opening a retail outlet (b) Introducing a new line of dolls ) Introducing a new action figure in an existing line of action figures (d) Adding another packaging line to the production process e) Adding pollution control equipment to avoid environmental fines n) Computerizing the doll-molding equipment (g) Introducing a child's version of an existing adult board game Classify each of the above projects into one of the four categories expansion, replacement, new product or market, or mandated. 11. Write a short answer to the following question: What is Capital Budgeting? 12. Which of the following Capital budgeting statements is false? A) Capital projects involve large amounts of money. B) Capital projects are typically hard (or costly) to reverse C) Capital projects and related financing are the source of all wealth to the managers a nd its employees. D) Capital projects and related financing are the source of all wealth to the firm and its stockholders.

Explanation / Answer

8 c.

9. a.

12. C

13.

15 A.

16 D.

Managers High salary Creditors Low risk, return of their money and interest Customers Low prices Employees Job security Suppliers High prices Owners Dividends or stock appreciation

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