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45. The term capilal budgeting describes how companies: A. plan significant investments in projects that have long-term implications. B. develop annual estimates that are used to create a budgeted income statement and balance sheet. C. use budgets to evaluate the perfomance of investment center managers. D. use activity-based costing to develop product and customer profitability projections. 46. Which of the following is not an example of a typical capital budgeting decision? A. The decision to lease or buy equipment. B. The decision to reduce or maintain this year's advertising budget. C. The decision to build a new plant or expand an existing plant. D. The decision to replace a plece of equipment now or later. 47. A company's cost of capital is usually regarded as: A. a reliable estimate of its simple rate of return. B. the hurdie rate it uses to compute capital investment payback periods. C. the amount by which its current assels exceed its current liabilities. D. its minimum required rate of return. 48. Which of the following statements is true regarding the intemal rate of return? A. It represents the net present value of an investment project. B. It represents the rate of return earned by an investment project. C. It represents the retum on investment (ROl) earned by an investment project. D. It represents the length of time that it takes for a project to recover its initial cost from the net cash. inflows that if generates. 49. Which of the following four options is true? n. Upoon 1 B. Option 2 C. Option 3 E. Option 4 50. Which of the following equations is used to calculate the simple rate of return? A. Initial investment + Annual incremental net operating income B. Annual incremental net operating income Initial investment C. Annual incremental cash flows + Initial investment D. Initial investment * Annual incremental cash flows

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