CHAPTER 26: CAPITAL INVESTMENT ANALYSIS
1. The process by which management plans, evaluates, and controls long-term investment decisions involving
fixed assets is called capital investment analysis.
a. True
b. False
2. Care must be taken involving capital investment decisions, since normally a long-term commitment of
funds is involved and operations could be affected for many years.
a. True
b. False
3. Only managers are encouraged to submit capital investment proposals because they know the processes and
are able to match investments with long-term goals.
a. True
b. False
8. The methods of evaluating capital investment proposals can be grouped into two general categories that can
be referred to as (1) average rate of return and (2) cash payback methods.
a. True
b. False
9. The methods of evaluating capital investment proposals can be grouped into two general categories that can
be referred to as (1) methods that ignore present value and (2) present values methods.
a. True
b. False
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