100 answer true false explanation cash received from

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100) Answer: True False Explanation: Cash received from the disposal of old equipment is relevant to a decision to buy a replacement. 101) The 'collect relevant information' stage of capital budgeting gathers information from all parts of the value chain to evaluate alternative projects. 101) Answer: True False Explanation: 102) A decrease in the tax rate will decrease the net present value (NPV) for a given capital budgeting project. 102) Answer: True False Explanation: A decrease in the tax rate will increase the net present value (NPV) for a given capital budgeting project. 103) The accrual accounting rate - of - return method is similar to the internal rate - of - return method in that both methods calculate a rate - of - return percentage. 103) Answer: True False Explanation: 104) In using the net present value (NPV) method for capital budgeting after - tax cash flows should be used instead of pre - tax cash flows when taxes are a consideration. 104) Answer: True False Explanation: 105) The payback method takes into account cash flows over the whole life of the project. 105) Answer: True False Explanation: The payback method ignores cash flows after the payback period is reached. 106) A post - investment audit of capital budgeting projects provides management with feedback about the performance of a project so management can compare actual results to the costs and benefits expected at the time the project was selected. 106) Answer: True False Explanation: 107) Unlike the net present value method and the internal rate - of - return method, the payback method does not distinguish between the origins of the cash flows. 107) Answer: True False Explanation: None of the three capital budgeting methods distinguish between the origins of the cash flows. 44
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108) The net present value method can indicate erroneous decisions as it implicitly assumes that project cash flows can be reinvested at the project's rate - of - return. 108) Answer: True False Explanation: The internal rate - of - return method implicitly assumes that project cash flows can be reinvested at the project's rate - of - return. The net present value method accurately assumes that project cash flows can only be reinvested at the company's required rate - of - return. 109) It is possible to use the net present value in an analysis of customer profitability. 109) Answer: True False Explanation: 110) The payback method allows for managers to highlight liquidity. 110) Answer: True False Explanation: 111) 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. 111) Answer: True False Explanation: 112) Deducting depreciation from operating cash flows would result in counting the initial investment twice in a discounted cash flow analysis. 112) Answer: True False Explanation: 113) The 'determine possible courses of action and consider the consequences of each' stage of the capital budgeting process consists of forecasting all potential net profit additions that are attributable to the alternative projects.
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