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FIN 3414 - Chapter 8
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FIN 3414 - Chapter 8
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FIN 3414 - CHAPTER 8 QUESTIONS ANDANSWERS
uCorporate finance techniques generally include the use of ______ while financial accounting stresses
______ numbers. - cash flows; income
Which of the following is an example of a sunk cost? - Test marketing expenses
Opportunity costs are - benefits lost due to taking on a particular project.
Which of the following are considered relevant cash flows? - Cash flows from erosion effects
Cash flows from opportunity costs
Cash flows from synergy effects
Allocated costs arise when a specific expenditure - benefits more than one project or division.
Which of the following is given greater importance in capital budgeting problems in corporate finance? -
Cash flows
For capital budgeting, opportunity costs are treated as - cash outflows.
Sunk costs are costs that - have already occurred and are not affected by accepting or rejecting a project.
Opportunity costs are classified as ____ costs in project analysis. - relevant
Side effects from investing in a project refer to cash flows from - erosion effects.
synergy effects.
Which of the following are true about allocated costs? - These costs are allocated to more than one
project.
These costs benefit more than one project.
For capital budgeting, the investment in working capital is assumed to be - recovered at the end of the
project.
What are the two sets of accounting books? - Tax books
Stokholders' books
The rules for depreciating assets for tax purposes are based upon provisions set forth in - IRS Publication
946.
Interest expenses incurred on debt financing are ______ when computing cash flows from a project. -
ignored
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