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Chapter 14

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Created by nkhsemail almost 9 years ago
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Resource summary

Question 1

Question
''Capital budgeting'' decisions, which involve the acquisition of (choose 3)
Answer
  • land
  • food
  • cars
  • air
  • buildings
  • equipment

Question 2

Question
Capital budgeting decisions, which involve the acquisition of land, buildings, and equipment, are among the most important decisions made by healthcare managers.
Answer
  • True
  • False

Question 3

Question
Capital budgeting
Answer
  • often involve large sums of money
  • often involve small sums of money

Question 4

Question
Second, they typically are costly to
Answer
  • reverse and extend over long periods of time.
  • reverse and intend over long periods of time.

Question 5

Question
Finally, they define the ____ direction of the business.
Answer
  • Finally, they define the strategic direction of the business.
  • Finally, they define the dull direction of the business.

Question 6

Question
proposed capital budgeting projects are ____ according to purpose and size
Answer
  • roposed capital budgeting projects are classified according to purpose and size
  • roposed capital budgeting projects are unclassified according to purpose and size

Question 7

Question
proposed capital budgeting projects are classified according to ___ and ___
Answer
  • purpose and assets
  • purpose and size

Question 8

Question
for example (choose 2)
Answer
  • expansion of existing services
  • expansion into no services
  • expansion into new services

Question 9

Question
investor-owned businesses, projects that are expected to ______ to shareholder wealth
Answer
  • not contribute
  • contribute

Question 10

Question
not-for-profit businesses, identifies a project’s expected ____ on the business’s financial condition
Answer
  • effect
  • stigma

Question 11

Question
financial analysis: estimate the cash flows initial cash outlay (cost) Operating flows Terminal (ending) flow
Answer
  • estimate the cash non flow
  • estimate the cash flow

Question 12

Question
initial cash outlay (___) Operating flows Terminal (ending) flow
Answer
  • oraganization
  • cash

Question 13

Question
Initial cash outlay (cost) Operating flows Terminal (___) flow
Answer
  • continous
  • ending

Question 14

Question
financial analysis assess the project's
Answer
  • cost
  • riskiness

Question 15

Question
Estimate the project cost of capital (opportunity cost of capital or discount rate)
Answer
  • True
  • False

Question 16

Question
Estimate the project cost of capital (____ ____ of capital or discount rate)
Answer
  • discount cost
  • opportunity cost

Question 17

Question
Estimate the project cost of capital (opportunity cost of capital or ___ ___)
Answer
  • discount rate
  • expenses rate

Question 18

Question
financial analysis measures the ___ ___
Answer
  • financial effort
  • financial impact

Question 19

Question
Key Concepts in Cash Flow Estimation Focus on cash flow as opposed to accounting income
Answer
  • True
  • False

Question 20

Question
Key Concepts in Cash Flow Estimation Focus on __ __ as opposed to accounting income
Answer
  • old flow
  • cash flow

Question 21

Question
Cash flow timing -Usually cash flows occur daily -Often approximated by annual flows
Answer
  • True
  • False

Question 22

Question
Cash flow timing -Usually cash flows occur ______ -Often approximated by annual flows
Answer
  • every 1 year
  • daily

Question 23

Question
Cash flow timing -Usually cash flows occur daily -Often approximated by ___ flows
Answer
  • Cash flow timing -Usually cash flows occur daily -Often approximated by annual flows
  • Cash flow timing -Usually cash flows occur daily -Often approximated by semi-annual flows

Question 24

Question
Project life -Often unknown -Often truncated if long (terminal value)
Answer
  • True
  • False

Question 25

Question
Project life -Often ____ -Often truncated if long (terminal value)
Answer
  • known
  • unknown

Question 26

Question
Key Concepts in Cash Flow Estimation -Do not include sunk costs -Do include opportunity costs: For capital For other resources
Answer
  • True
  • False

Question 27

Question
Key Concepts in Cash Flow Estimation - ____________________________ -Do include opportunity costs: For capital For other resources
Answer
  • does includes sunk costs
  • does not include sunk cost

Question 28

Question
Key Concepts in Cash Flow Estimation -Do not include sunk costs -Do include _________: For capital For other resources
Answer
  • opportunity costs
  • business costs

Question 29

Question
Inflation effects must be considered Any strategic value implications must be considered
Answer
  • True
  • False

Question 30

Question
what 2 things must be considered?
Answer
  • deflation effects
  • inflation effects
  • non strategic value
  • strategic value

Question 31

Question
investment at t = 0 ( _ _ _ ) s
Answer
  • 123
  • 000

Question 32

Question
Investment at t = 0 (000s)
Answer
  • True
  • False

Question 33

Question
note that these cash flows are estimates
Answer
  • estimates
  • not estimates

Question 34

Question
If this were a replacement rather than a new (expansion) project, would the analysis change? The relevant operating cash flows would be the same between the cash flows on the new and old project.
Answer
  • True
  • False

Question 35

Question
If this were a replacement rather than a new (expansion) project, would the analysis change? The relevant operating cash flows would be ___ ___ between the cash flows on the new and old project.
Answer
  • the same
  • very different

Question 36

Question
However, selling the old equipment would produce an immediate cash inflow, but the salvage value at the end of its original life is foregone
Answer
  • cash inflow
  • cash outflow

Question 37

Question
There are many different approaches to breakeven in project analysis: Time breakeven Input variable breakeven
Answer
  • True
  • False

Question 38

Question
There are many different approaches to breakeven in project analysis: Time breakeven ___ variable breakeven
Answer
  • input
  • output

Question 39

Question
There are many different approaches to breakeven in project analysis: ___ breakeven Input variable breakeven
Answer
  • quality
  • time

Question 40

Question
time breakeven, which is measured by payback (or payback period).
Answer
  • True
  • False

Question 41

Question
time breakeven, which is measured by ---------- (or --------- period).
Answer
  • outback
  • payback

Question 42

Question
Advantages of Payback: 1. Easy to calculate and understand. Provides an indication of a project’s risk and liquidity. Disadvantages of Payback: 1. Ignores time value. 2. Ignores all cash flows that occur after the payback period.
Answer
  • True
  • False

Question 43

Question
Advantages of Payback: 1. ____ to calculate and understand. Provides an indication of a project’s risk and ___ Disadvantages of Payback: 1. Ignores time value. 2. Ignores all cash flows that occur after the payback period.
Answer
  • hard, liquidity
  • easy, liquidity

Question 44

Question
Advantages of Payback: 1. Easy to calculate and understand. Provides an indication of a project’s risk and liquidity. Disadvantages of Payback: 1. Ignores ____ ___. 2. Ignores all cash flows that occur after the payback period.
Answer
  • time value
  • project risk
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