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Unformatted text preview: n D) usually does not result in an increase in working capital depreciation usually has no effect on the disposal price of the machine Answer: B Diff: 1 Terms: capital budgeting Objective: 7 AACSB: Reflective thinking 104) The relevant terminal disposal price of a machine equals the: A) difference B) between the salvage value of the old machine and the ultimate salvage value of the new machine total of the C) salvage values of the old machine and the new machine salvage value of the old machine D) salvage value of the new machine Answer: A Diff: 3 Terms: capital budgeting Objective: 7 AACSB: Reflective thinking 105) Post- investment audits: A) should be done as soon as possible after the investment is made. B) provide C) management with feedback about the performance of a project. include D) obtaining appropriation requests so that the funding will be authorized to purchase the equipment. are usually not large project because the cost accounting system does not collect actual costs at the same level of detail as the initial feasible in a plans had. Answer: B Diff: 3 Terms: capital budgeting Objective: 7 AACSB: Communication 106) The reason to have a post-investment audits is: A) they discourage mid-level managers from making overly optimistic estimates during the early stages of the capital budgeting process. B) they help alert senior management to problems in the implementation of the project. C) they are a D) means by which actual results can be compared to the costs and benefits expected. All of the above are correct. Answer: D Diff: 3 Terms: capital budgeting Objective: 7 AACSB: Communication 107) Capital investment decisions that are strategic in nature: A) are easily capital budgeting process when the accrual accounting rate of return method is used as the tool to analyze the handled by the alternatives. B) are often C) referred to as "real options." require D) managers to consider a broad range of factors that may be difficult to estimate. All of the above are cor...
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