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6 Cards in this Set
- Front
- Back
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Capital budgeting is used to determine: |
If projects should be funded or killed |
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In capital budgeting if the present value of the cash inflows are LESS than the costs, then what should happen? |
The project should be killed |
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One important difference between capital budgeting and security analysis is that in security analysis the analyst must generally take the projected cash flows as given rather than something the analyst can influence, whereas firms can often influence the cash flows from projects by making operating changes. True or False? |
True |
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Mutually exclusive projects are projects that: |
Cannot be done together |
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In capital budgeting independent projects are projects that: |
Have cash flows that do not depend on the other project |
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The NPV should be used as the primary capital budgeting decision criterion because: |
It tells us how much the project is expected to add or subtract from a firms value |
