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Manal Elkhoshkhany
Manal Elkhoshkhany, Tutor
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1. Each project should be judged against A) the specific

Customer Question

1. Each project should be judged against
A) the specific means of financing used to support its implementation.
B) the going interest rate at that point in time.
C) the cost of new common stock equity.
D) none of these.

2. Financial capital does not include
A) stock.
B) bonds.
C) preferred stock.
D) working capital.

3. The overall weighted average cost of capital is used instead of costs for specific sources of funds because
A) use of the cost for specific sources of capital would make investment decisions inconsistent.
B) a project with the highest return would always be accepted under the specific cost criteria.
C) investments funded by low cost debt would have an advantage over other investments.
D) both a and c are correct.

4. Cash flow can be said to equal
A) operating income less taxes plus depreciation.
B) operating income less taxes.
C) operating income before depreciation and taxes plus depreciation.
D) operating income after taxes minus depreciation.

5. The reason cash flow is used in capital budgeting is because
A) cash rather than income is used to purchase new machines.
B) cash outlays need to be evaluated in terms of the present value of the resultant cash inflows.
C) to ignore the tax shield provided from depreciation ignores the cash flow provided by the machine which should be reinvested to replace old worn out machines.
D) all of these.

6. The first step in the capital budgeting process is
A) collection of data.
B) idea development.
C) assign probabilities.
D) determine cashflow.

7. Capital budgeting is primarily concerned with
A) capital formation in the economy.
B) planning future financing needs.
C) evaluating investment alternatives.
D) minimizing the cost of capital.

8. The term "risk averse" means that
A) an individual refuses to take risks.
B) most investors and businessmen seek risk.
C) an individual will seek to avoid risk or be compensated with a higher return.
D) only investment proposals with no risk should be accepted.

9. Risk is usually measured as the
A) potential loss.
B) variability of outcomes around some expected value.
C) probability of expected values.
D) potential expected loss.

10. Which of the following is a false statement?
A) Risky investments may produce large losses.
B) Risky investments may produce large gains.
C) The coefficient of variation is a risk measure.
D) Risk-averse investors cannot be induced to invest in risky assets.
Submitted: 6 years ago.
Category: Homework
Expert:  Manal Elkhoshkhany replied 6 years ago.

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Customer: replied 6 years ago.
how is it going i have a new for you? math do you think you can pick it up for me
Expert:  Manal Elkhoshkhany replied 6 years ago.

Hello gmad and welcome back. I am good with Math, so let me see if I can help. please make a new post and type "For BusinessTutor" at the beginning of the post (Remember to tell me your deadline as well as the name of the book you are using: Title, author's name, and edition)


Thank you

Customer: replied 6 years ago.
so are you going to be able to help me
Customer: replied 6 years ago.
what happen you couldnt help me out

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