Question 1

Capital budgeting is the process of making long-run planning decisions for investments in projects.

Accepted Answer

Capital budgeting refers to the process of analyzing and selecting long-term investments that are expected to generate cash flow and increase the value of the firm.

Question 2

Which of the following is a stage of the capital budgeting process during which a plant manager is queried for assembly time?
A) make decisions by choosing among alternatives stage
B) obtain information stage
C) make predictions stage
D) implement the decision, evaluate performance, and learn stage

Accepted Answer

Obtaining information is the stage during which the necessary data is collected in order to evaluate potential projects. In this stage, managers may query various departments, including the plant manager, for information such as assembly time, in order to make an informed decision about which projects should be pursued.

Question 3

Match each one of the examples below with one of the stages of the capital budgeting decision model.
Stages:
 1. Identify Projects
2. Obtain Information
3. Make Predictions
4. Make Decisions by Choosing Among Alternatives
5. Implement the Decision, Evaluate Performance, and Learn

___a. Issuing corporate stock for the funds to purchase new equipment
___b. Learning how to effectively operate Machine \#8 only takes 15 minutes
___c. The need to reduce the costs to process the vegetables used in producing goulash
___d. Monitoring the costs to operate a new machine
___e. Percentage of defective merchandise considered too high
___f. Will introducing the new product substantially upgrade our image as a producer of quality products?
___g. Estimating yearly cash flows and setting investment bud gets accordingly using a 12-year planuning horizon.
___h. Use of the internal rate of return for eachalternative
___i. Tracking realized cash flows and comparing against estimated numbers.

Accepted Answer

a. 5. Implement the Decision, Evaluate Performance, and Learn
b. 2. Obtain Information
c. 1. Identify Projects
d. 5. Implement the Decision, Evaluate Performance, and Learn
e. 1. Identify Projects
f. 2. Obtain Information
g. 3. Make Predictions
h. 4. Make Decisions by Choosing Among Alternatives
i. 5. Implement the Decision, Evaluate Performance, and Learn

Question 4

List the capital budgeting methods used to analyze financial information.

Accepted Answer

The answer of List the capital budgeting methods used to...

Question 5

Which of the following is a stage of the capital budgeting process that forecasts all potential cash flows attributable to the alternative projects?
A) identify projects stage
B) make decisions by choosing among alternatives stage
C) implement the decision, evaluate performance, and learn stage
D) make predictions stage

Accepted Answer

The stage that forecasts all potential cash flows attributable to the alternative projects is the make predictions stage. This stage involves projecting cash inflows and outflows for each alternative project and determining the financial feasibility of each.

Question 6

Which of the following is the first stage to the capital budgeting process?
A) forecast all potential cash flows attributable to the alternative projects
B) determine which investment yields the greatest benefit and the least cost to the organization
C) obtain funding and make the investments selected
D) identify potential capital investments that agree with the organization's strategy

Accepted Answer

The first stage of the capital budgeting process is to identify potential capital investments that align with the organization's strategy. This helps ensure that the investments made contribute to achieving the organization's goals and objectives. Once potential investments are identified, the other stages of the process can begin, such as forecasting cash flows, evaluating costs and benefits, and obtaining funding.

Question 7

Which of the following is a stage of the capital budgeting process in which a firm obtains funding for the project?
A) make decisions by choosing among alternatives stage
B) identify projects stage
C) obtain information stage
D) implement the decision, evaluate performance, and learn stage

Accepted Answer

The answer of Which of the following is a stage...

Question 8

In the "Identify projects" stage of capital budgeting,companies gather information from all parts of the value chain to evaluate alternative projects.

Accepted Answer

In "Identify projects" stage of capital budgeting, companies identify potential capital investments that agree with organizations' strategies. In the second stage, companies obtain information.

Question 9

In the "make decisions by choosing among alternatives" stage of the capital budgeting process,a company determines which investment yields the greatest benefit and the least cost to the organization.

Accepted Answer

In the "make decisions by choosing among alternatives" stage of capital budgeting, a company evaluates and compares different investment opportunities in order to determine which investment yields the greatest benefit and least cost to the organization. This involves analyzing the expected cash flows, risks, and other relevant factors associated with each alternative in order to make an informed decision about which projects to undertake.

Question 10

In the "obtain information" stage of capital budgeting,a company gathers information from all parts of the value chain to evaluate alternative projects.

Accepted Answer

In the "obtain information" stage of capital budgeting, a company does gather information from all parts of the value chain to evaluate alternative projects. This includes data related to production, marketing, finance, and other departments within the organization.

Question 11

Which capital budgeting technique measures all expected future cash inflows and outflows as if they occurred at a single point in time?
A) net present value method
B) accrual accounting rate-of-return method
C) payback method
D) sensitivity analysis

Accepted Answer

The answer of Which capital budgeting technique measures all expected...

Question 12

In the "make predictions" stage of the capital budgeting process,a company forecasts all potential net income additions those are attributable to the alternative projects.

Accepted Answer

In the "make predictions" stage of the capital budgeting process, company forecasts all potential cash flows attributable to the alternative projects.

Question 13

Which of the following is a stage of the capital budgeting process that determines which investment yields the greatest benefit and the least cost to an organization?
A) make decisions by choosing among alternatives stage
B) make predictions stage
C) identify projects stage
D) implement the decision, evaluate performance, and learn stage

Accepted Answer

This stage of the capital budgeting process involves analyzing and comparing various investment options to determine which investment will yield the greatest benefit and the least cost to the organization. It involves considering factors such as the investment's profitability, risks, and impact on the organization's long-term goals. Therefore, the correct answer is A.

Question 14

Which of the following is a stage of the capital budgeting process that indicates potential capital investments that agree with an organization's strategy?
A) identify projects stage
B) make predictions stage
C) obtain information stage
D) implement the decision, evaluate performance, and learn stage

Accepted Answer

The identify projects stage is where potential capital investments that align with an organization's strategy are identified. The make predictions stage involves analyzing potential outcomes of the identified projects, the obtain information stage involves gathering relevant information for decision-making, and the implement the decision, evaluate performance, and learn stage involves putting the chosen investment into action and evaluating its performance.

Question 15

A capital budget spans only a one-year period.

Accepted Answer

A capital budget typically spans multiple years, ranging from 3 to 10 years, depending on the organization's needs and goals.

Question 16

The final activity in the capital budgeting process is to obtain funding and make the investments identified in the make decisions by choosing among alternatives stage of the process.

Accepted Answer

The final activity in the capital budgeting process is typically the review and post-audit of the investment's performance, not obtaining funding and making the investments.

Question 17

The accounting system that corresponds to the project dimension in capital budgeting is the ________.
A) net present value method
B) internal rate of return
C) accrual accounting rate of return
D) life-cycle costing

Accepted Answer

Life-cycle costing is an accounting system that considers all costs associated with a project over its entire life, aligning with the project dimension in capital budgeting.

Question 18

Which of the following is a stage of the capital-budgeting process that tracks realized cash flows and compares those against estimated numbers?
A) implement the decision, evaluate performance, and learn stage
B) make predictions stage
C) identify projects stage
D) make decisions by choosing among alternatives stage

Accepted Answer

The stage that tracks realized cash flows and compares those against estimated numbers is the evaluate performance stage, which is part of the implement the decision, evaluate performance, and learn stage.

Question 19

Which of the following involves the process of making decisions for significant financial investments in projects to develop new products,expand production capacity,or remodel current production facilities?
A) capital budgeting
B) working capital management
C) master budgeting
D) capitalization

Accepted Answer

Capital budgeting involves the process of analyzing and making decisions for significant financial investments in projects to develop new products, expand production capacity, or remodel current production facilities. Working capital management deals with managing the day-to-day cash flows and short-term assets and liabilities of a company. Master budgeting involves developing a comprehensive plan for all aspects of a company's operations. Capitalization refers to the process of raising capital by issuing stocks or bonds.

Question 20

Capital budgeting is a process of ________.
A) tracing overhead costs to products by focusing on the activities that drive costs
B) assigning identified costs to specific cost objectives or cost centers
C) measuring an organization's operations, products, and services against those of competitors recognized as market leaders
D) making long-run planning decisions for investments in projects

Accepted Answer

Capital budgeting involves analyzing and evaluating long-term investment projects and deciding whether they add value to the business. This process helps in making informed decisions about which projects to invest in and how to allocate resources to them.

Quiz 21: Capital Budgeting and Cost Analysis

Capital budgeting is the process of making long-run planning decisions for investments in projects.

Which of the following is a stage of the capital budgeting process during which a plant manager is queried for assembly time?

List the capital budgeting methods used to analyze financial information.

Which of the following is a stage of the capital budgeting process that forecasts all potential cash flows attributable to the alternative projects?

Which of the following is the first stage to the capital budgeting process?

Which of the following is a stage of the capital budgeting process in which a firm obtains funding for the project?

In the "Identify projects" stage of capital budgeting,companies gather information from all parts of the value chain to evaluate alternative projects.

In the "make decisions by choosing among alternatives" stage of the capital budgeting process,a company determines which investment yields the greatest benefit and the least cost to the organization.

In the "obtain information" stage of capital budgeting,a company gathers information from all parts of the value chain to evaluate alternative projects.

Which capital budgeting technique measures all expected future cash inflows and outflows as if they occurred at a single point in time?

In the "make predictions" stage of the capital budgeting process,a company forecasts all potential net income additions those are attributable to the alternative projects.

Which of the following is a stage of the capital budgeting process that determines which investment yields the greatest benefit and the least cost to an organization?

Which of the following is a stage of the capital budgeting process that indicates potential capital investments that agree with an organization's strategy?

A capital budget spans only a one-year period.

The final activity in the capital budgeting process is to obtain funding and make the investments identified in the make decisions by choosing among alternatives stage of the process.

The accounting system that corresponds to the project dimension in capital budgeting is the ________.

Which of the following is a stage of the capital-budgeting process that tracks realized cash flows and compares those against estimated numbers?

Which of the following involves the process of making decisions for significant financial investments in projects to develop new products,expand production capacity,or remodel current production facilities?

Capital budgeting is a process of ________.