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Unformatted text preview: Self Study, Question 1 Correct! All of these are examples of increases in longlived assets on the balance sheet. Capital expenditures include plant assets (such as equipment, buildings, and land), and intangible assets (such as patents and copyrights). Which of the following is not a capital expenditure? Building a new factory. Purchasing a new piece of equipment. Purchasing a computer system. All of the above are capital expenditure decisions. Self Study, Question 2 Incorrect! This method does not consider the time value of money. Which of the following methods equates future dollars to current dollars? Both "Net present value method" and "Internal rate of return method" are correct. Net present value method. Internal rate of return method. Payback period method. Self Study, Question 2 Which of the following methods equates future dollars to current dollars? Both "Net present value method" and "Internal rate of return method" are correct. Self Study, Question 3 Correct! This is the mathematical approach to time value of money. Two periods of interest at 8% are removed from $100 to determine how much you are willing to pay today in order to receive $100 two years later. In this case, the present value is $85.73. If you deposit this in the bank and earn 8%, at the end of year 1, you will have $85.73 + ($85.73 x.08), which is $92.59....
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This note was uploaded on 08/02/2011 for the course MGMT 425 taught by Professor Brown/lexner during the Spring '11 term at Kaplan University.
 Spring '11
 Brown/Lexner

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