完整版公司理财英文版题库8

CHAPTER 8CHAPTER 8 Making Capital Investment DecisionsMaking Capital Investment Decisions I. I.DEFINITIONSDEFINITIONS INCREMENTAL CASH FLOWSINCREMENTAL CASH FLOWS a1.The changes in a firm’s future cash flows that are a direct consequence of accepting a project are called _____ cash flows. a.incremental b.stand-alone c.after-tax present value e.erosion Difficulty level: Easy EQUIVALENT ANNUAL COSTEQUIVALENT ANNUAL COST e2.The annual annuity stream of payments with the same present value as a project’s costs is called the project’s _____ cost. a.incremental b.sunk c.opportunity d.erosion e.equivalent annual Difficulty level: Easy SUNK COSTSSUNK COSTS c3.A cost that has already been paid, or the liability to pay has already been incurred, is a(n): a.salvage value expense. working capital expense. c.sunk cost. d.opportunity cost. e.erosion cost. Difficulty level: Easy OPPORTUNITY COSTSOPPORTUNITY COSTS d4.The most valuable investment given up if an alternative investment is chosen is a(n): a.salvage value expense. working capital expense. c.sunk cost. d.opportunity cost. e.erosion cost. Difficulty level: Easy EROSION COSTSEROSION COSTS e5. a. b. c. d. e. Difficulty level: Easy PRO A FINANCIAL STATEMENTSPRO A FINANCIAL STATEMENTS a6.A pro a financial statement is one that: a.projects future years’ operations. b.is expressed as a percentage of the total assets of the firm. c.is expressed as a percentage of the total sales of the firm. d.is expressed relative to a chosen base year’s financial statement. e.reflects the past and current operations of the firm. Difficulty level: Easy MACRS DEPRECIATIONMACRS DEPRECIATION b7.The depreciation currently allowed under US tax law governing the accelerated write-off of property under various lifetime classifications is called _____ depreciation. a.FIFO b.MACRS c.straight-line d.sum-of-years digits e.curvilinear Difficulty level: Easy DEPRECIATION TAX SHIELDDEPRECIATION TAX SHIELD c8.The cash flow tax savings generated as a result of a firm’s tax-deductible depreciation expense is called the: a.after-tax depreciation savings. b.depreciable basis. c.depreciation tax shield. d.operating cash flow. e.after-tax salvage value. Difficulty level: Easy CASH FLOWCASH FLOW d9.The cash flow from projects for a company is computed as the: operating cash flow generated by the project, less any sunk costs and erosion costs. b.sum of the incremental operating cash flow and after-tax salvage value of the project. income generated by the project, plus the annual depreciation expense. d.sum of the incremental operating cash flow, capital spending, and net working capital expenses incurred by the project. e.sum of the sunk costs, opportunity costs, and erosion costs of the project. The cash flows of a new project that come at the expense of a firm’s existing projects are called: salvage value expenses. net working capital expenses. sunk costs. opportunity costs. erosion costs. Difficulty level: Medium II