Principles of Managerial Finance, I3e, Global Edition (Gitman)

Chapter 10 Capital Budgeting Tehniques

10.1 Understand the key elements of the capital budgeting process.

) In capital budgeting. the preferred approaches in assessing whether a project is acceptable are
those that nlcgrate time valuc prOCedures, risk and return consideralions, and valuation concepts.
Answer: TRUE
Tpic: Capital Budgeting Tchniques
Question Status: RevISed
AACSB Giuidelmes: Rellective thinking skills

2) In capital budgeting. the prefered approaches in assessing whether a project is acceptable

integrate tume value proccdures, risk and returm considerations, valualion concepts, and the
required payback period,
Answer: FALSE
Topic: Capital Budgeting Tachniques
Question Status: Revised
AACSB Guidelines: Reflective thinking skills

3) Capital budgeting techniques are used to evaluate the fim's fixed asset investments which
provide the basis for the firm's earming power and valuc.
wer: TRUE
Topic: Concept of Capital Budgeting
Question Status: Revised
AACSB Guidelines: Reflective thinking skills

4) The purehase of additional physical facilities, such as additional property or a new factory, is

an example ola capital expenditure.

Answ nital Bu
a p i t a l Budgeting Taminology
ucs mes:
AACSB Cuidelmes: Reflective thinking skis

3)Capital budgetung 18 the process of evaluating and selecting short-term investments consislent
wilh the lim's goal of owner wealth maximzalion.

uwFALSE
Topic: Concept of Capital Budgeting
Queston Sans evIe
AACSB Guidelines: Reflective thinking skills

6) A S60.000 outlay for a new machine with a usable life of 15 years is an operating expenditure
current asset on the firms balance sheet
that would appear
Answer: FALSE
as a

Topic: Cupital Budgeting Taminology

Question Status: Revised
AACSB Cuidelines: Reflective thinking skills

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