POFchapter8 - Chris Bergman Principles of Finance SECTION...

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Chris Bergman Principles of Finance SECTION 25049 OPC 004 November 3, 2008 christopherbergman@g.austincc.edu Chapter 8 1) a. Operating expenditure b. Operating expenditure c. Capital expenditure d. Capital expenditure e. Capital expenditure f. Capital expenditure g. Capital expenditure h. Operating expenditure 2) A. a. Mutually exclusive b. Unlimited funds c. ranking is required d. Conventional B. a. Mutually exclusive b. Unlimited funds c. Not required d. nonconventional C. a. Independent b. Rationed c. ranking is required d. nonconventional 5) a. Sunk cost b. opportunity cost c. opportunity cost d. Sunk cost e. Opportunity cost
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19) ( 1) 3 years (2) 5 years (3) 7 years After-tax proceeds from sale of new asset Proceeds from sale of proposed asset $10,000 $10,000 $10,000 +Tax on sale of proposed asset $16,880 $400 $4,000 = Total after-tax proceeds of new asset $26,880 $9,600 $6,000 After-tax proceeds from sale of old asset Proceeds from sale of old asset 0 0 0 + Tax on sale of old asset 0 0 0
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POFchapter8 - Chris Bergman Principles of Finance SECTION...

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