Finance Chapters 9,10, and 11

The pattern of cash flow stream that is the most difficult to use when evaluating projects? Noncoventional Flow
A conventional cash flow pattern associated with capital investment projects consists of an initial ___________ outflow followed by a series of inflows
Cash outlays that had been previously made and have no effect on the cash flows relevant to a current decision are called _________ sunk cost
_________ projects have the same function; the acceptance of one ________ the others from consideration Mutually exclusive; eliminates
A firm with limited dollars available for capital expenditures is subject to _________ capital rationing
A non – conventional cash flow pattern associated with capital investment projects consists of an initial outflow followed by a series of both cash inflows and outflows
The _________ reflects the return that must be earned on the given project to compensate the firm’s owners adequately according to the project’s variability of cash flows risk – adjusted discount rate
A tax adjustment must be made in determining the cost of _________ long – term debt
A $60,000 outlay for a new machine with a usable life of 15 years is called ________ capital expenditure
The ________ is the rate of return a firm must earn on its investments in projects in order to maintain the market value of its stock cost of capital
The cost of capital reflects the cost of funds over a long – run time period
All of the following are motives for capital budgeting expenditures EXCEPT invention
Relevant cash flows for a project are best described as _________ incremental cash flows
Examples of sophisticated capital budgeting techniques include all of the following EXCEPT payback period
__________ projects do not compete with each other; the acceptance of one _________ the others from consideration Independent; does not eliminate
Initial cash flows and subsequent operating cash flows for a project are sometimes referred to as relevant cash flows
__________ is the process of evaluating and selecting long – term investments consistent with the firm’s goal of owner wealth maximization Capital budgeting
The __________ approach is used to convert the net present value of unequal – lived projects into an equivalent annual amount (in net present value terms) annualized net present value
The first step in the capital budgeting process is proposal generation
Some firms use the payback period as a decision criterion or as a supplement to sophisticated decision techniques, because it can be viewed as a measure of risk exposure because of its focus on liquidity
The __________ is the firm’s desired optimal mix of debt and equity financing target capital structure

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