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Unformatted text preview: 1 WEEK 5 REVIEW QUESTIONS 1. The capital budgeting process involves ( Points: 1 ) identifying potential investments and estimating the incremental cash inflows and outflows of cash associated with each investment analyzing and prioritizing the investments utilizing various decision criteria implementing and monitoring the selected investment projects estimating a fair rate of return on each investment given its risk all of the above 2. The preferred technique for evaluating most capital investments is ( Points: 1 ) payback period discount payback period internal rate of return net present value 3. Gamma Electronics -- Gamma Electronics is considering the purchase of testing equipment that will cost $500,000 to replace old equipment. Assume the new machine will generate after-tax savings of $250,000 per year over the next four years. Referring to Gamma Electronics. What's the payback period for the investment? ( Points: 1 ) 1.8 years 2.0 years 2.5 years 2.8 years 4. Gamma Electronics -- Gamma Electronics is considering the purchase of testing equipment...
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- Fall '09
- Net Present Value, Gamma Electronics