| 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 |
