Capital Expenditure Assignment
ll. Which of the following is true of a capital expenditure?
A) It is commonly used to expand the level of operations.
B) It is an outlay made to replace current assets.
C) It is an outlay expected to produce benefits within one year.
D) It is commonly used for current asset expansion.
12. Which of the following capital budgeting techniques ignores the time value of money?
A) net present value
B) internal rate of return
C) profitability index
D) payback period approach
13. What is the payback period for Tangshan Mining company’s new project if its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,300,000 in year 2, $ 700,000 in year 3, and $1,800,000 in year 4?
A) 3.67 years B) 3.33 years C) 2.33 years D) 1.33 years. Get Finance homework help today