Measurement and Decision Making Final

GB519: Measurement and Decision Making Final

1.Omaha Plating Corporation is considering purchasing a machine for $1,500,000. The machine will generate a constant after-tax income of $100,000 per year for 15 years. The firm will use straight-line (SL) depreciation for the new machine over 10 years with no residual value.
What is the payback period for the new machine, under the assumption that cash inflows occur evenly throughout the year? (Points : 2)





2.In making capital budgeting decisions, the principal focus is on: (Points : 2)





3.The excess of the present value of future cash flows over the initial investment outlay for a project is the: (Points : 2)





4.Done on a regular basis, relevant cost pricing in special order decisions can erode normal pricing policies and lead to: (Points : 2) Measurement





5.Which one of the following is most descriptive of strategic analysis? (Points : 2)





6.Which one of the following statements concerning capital budgeting is not true? (Points : 2)





7.The decision technique that measures the estimated performance of a capital investment by dividing the project’s annual after-tax income by the average investment cost is called the: (Points : 2) Measurement





 

8.To make a special order decision, managers need critical information about all the following except: (Points : 2)




9.A truck, costing $25,000 and uninsured, was wrecked the very first day it was used. It can either be disposed of for $5,000 cash and be replaced with a similar truck costing $27,000, or rebuilt for $20,000 and be brand new as far as operating characteristics and looks are concerned. The best choice provides a net savings of: (Points : 2) Measurement




10.Which one of the following methods assumes that all interim cash inflows generated by an investment earn a return equal to the internal rate of return (IRR) of the investment? (Points : 2)





11.The opportunity cost of making a component part in a factory with no excess capacity is the: (Points : 2)





12.Generally speaking, when ranking two mutually exclusive investments with different initial amounts, management should give first priority to the project: (Points : 2)





Measurement

13.Which one of the following is correct for determining relevant costs? (Points : 2)

Measurement





14.The term “breakeven after-tax cash flow” represents: (Points : 2)





15.The value chain analysis used in connection with the make or buy decision often leads a firm to make use of: (Points : 2)




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