Answer false explanation managersusing

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Unformatted text preview: crual accounting rate-of-return method is similar to the internal rate-of-return method because both methods calculate a rate-ofreturn percentage. Answer: TRUE Diff: 2 Terms: accrual accounting rate of return (AARR) Objective: 5 AACSB: Reflective thinking 21) Managers discounted cash flow methods to make capital budgeting decisions make the same decisions that they would make in using using the accrual accounting rate-of-return methods. Answer: FALSE Explanation: Managers using discounted cash flow methods to make capital budgeting decisions make different decisions that they would make in using the accrual accounting rate-of-return methods. Diff: 2 Terms: discounted cash flow (DCF) methods, accrual accounting rate of return (AARR) Objective: 5 AACSB: Reflective thinking 22) The accrual accounting rate-of-return method has a significant weakness for use in making capital budgeting decisions because it does not track cash flows and it ignores the time value of money. Answer: TRUE Diff: 2 Terms: discounted cash flow (DCF) methods, accrual accounting rate of return (AARR) Objective: 5 AACSB: Reflective thinking 23) A who uses discounted cash flow methods to make capital budgeting decisions does not face goal-congruence issues if the manager accrual accounting rate of return is used for performance evaluation. Answer: FALSE Explanation: The manager does face Diff: 2 Terms: discounted cash flow (DCF) methods, capital budgeting Objective: 6 AACSB: Reflective thinking 24) There is inconsistency between using the net present value method as best for capital budgeting decisions and then using a different an method to evaluate performance. Answer: TRUE Diff: 2 Terms: discounted cash flow (DCF) methods, capital budgeting Objective: 6 AACSB: Analytical skills 25) The four categories of cash flow for an investment project are: (1) net initial investment, (2) net income, (3) after tax cash flow from typical operations, and (4) after tax cash flow from terminal disposal of an asset. Answer: FALSE Explanation: The three typical categori...
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