When evaluating capital projects, the following cost and revenues must be taken in consideration: All total cost and revenues associated with each project. Only large cost and revenues that affect the project. Only those cost and revenues that can be identified to the project. Only relevant cost and relevant revenues associated with the projects.

When evaluating capital projects, the following cost and revenues must be taken in consideration: All total cost and revenues associated with each project. Only large cost and revenues that affect the project. Only those cost and revenues that can be identified to the project. Only relevant cost and relevant revenues associated with the projects.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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When the weighted average cost of capital for a project is considered on an after tax basis, this is considered the ____________ cost of capital Preferred Marginal Actual Estimated
Capital investment projects include proposals for all of the following except A. the acquisition of government mandated pollution control equipment. B. the expansion of existing product offerings. C. additional research and development facilities. D. refinancing existing working capital agreements.
3) Which of the following statements correctly relates to project appraisal? A) Changes in working capital as a result of implementing a project should be included in the project appraisal. B) The costs of surveys and feasibility studies incurred prior to the decision to implement a project should be included in the project appraisal, as they are a cost of the project. C) The effect of a new project on other parts of a business is irrelevant when trying to decide whether to go ahead with the new project. D) Depreciation is a legitimate cost of a project and should be included in a project appraisal.
Explain the conditions under which a company’s WACC is appropriate to use as the cost of capital when evaluating the company’s projects.
For a capital investment project to be acceptable, it must generate a rate of return A) Less than the required rate of returnB) Equal to or greater than the cost of capitalC) equal to the initial investmentD) none of the above
Please answer the following questions.
Identify “relevant” cash flows that should and should not be included in a capital budgeting analysis.
The weighted average cost of capital is used to determine whether or not a project should be done. true false
If an internal service fund is intended to operate on a cost-reimbursement basis, then user charges should a. cover the full costs, both direct and indirect, of operating the fund. b. cover the full costs of operating the fund and provide for future expansion and replacement of capital assets. c. cover at a minimum the direct costs of operating the fund. d. do all of the above.
i. Whether profitable project or non-profit project the time value of money is important consideration among project planners and profesions develop a case of your choice demonstrating future value and present value computations to validate this statement ii. Define the following terms a) Cost benefit analysis b) Time value of money c) Capital d) Multiple rate of return e) Institutional appraisal
What are the major methods used to prioritize capital projects?
What other sources provide resources for capital projects funds?