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EACH MCQ IS WORTH .5

4. Which of the following would not be relevant in a make-or-buy decision?

1. Direct materials
2. Factory depreciation
3. Direct labor
4. Variable overhead

ANSWER___________________

.. 7. Which of the following is not a capital budgeting decision?

1. Purchasing new equipment
2. Replacing old equipment
3. Producing a film project
4. Planning for retirement

ANSWER___________________

8. Capital investment decisions often involve all of the following except ________.

1. qualitative factors or considerations
2. short periods of time
3. large amounts of money
4. risk

ANSWER___________________

9. You are explaining time value of money factors to your friend. Which factor would you explain as being larger?

1. The future value of $1 for 12 periods at 6% is larger.
2. The present value of $1 for 12 periods at 6% is larger.
3. Neither one is larger because they are equal.
4. There is not enough information given to answer this question.

ANSWER___________________

10. The process that determines the present value of a single payment or stream of payments to be received is ________.
    1. compounding
    2. discounting
    3. annuity
    4. lump-sum

ANSWER___________________

11. Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the initial investment?

1. internal rate of return (IRR) method
2. net present value (NPV)
3. discounted cash flow model
4. future value method

ANSWER___________________

12. The NPV method assumes that cash inflows associated with a particular investment occur when?

1. only at the time of the initial investment
2. only at the end of the year
3. only at the beginning of the year
4. at any of these times

ANSWER___________________

13. The process of reinvesting interest earned to generate additional earnings over time is ________.

1. compounding
2. discounting
3. annuity
4. lump-sum

ANSWER___________________

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