Questions from Financial Management

Q: Discuss how capital budgeting procedures might be used by each of the

Discuss how capital budgeting procedures might be used by each of the following: a. Personnel managers b. Research and development staffs c. Advertising executives

Q: What is a mutually exclusive investment project? An independent project?

What is a mutually exclusive investment project? An independent project? A contingent project? Give an example of each.

Q: What effect does capital rationing have on a firm’s ability to maximize

What effect does capital rationing have on a firm’s ability to maximize shareholder wealth?

Q: What are the primary types of capital investment projects? Does a

What are the primary types of capital investment projects? Does a project’s type influence how it is analyzed?

Q: Cash flows for a particular project should be measured on an incremental

Cash flows for a particular project should be measured on an incremental basis and should consider all the indirect effects of the project. What does this involve?

Q: What factors should be considered when estimating a project’s NINV?

What factors should be considered when estimating a project’s NINV?

Q: Depreciation is a noncash expense; why is it considered when estimating

Depreciation is a noncash expense; why is it considered when estimating a project’s net cash flows?

Q: What are the potential tax consequences of selling an old asset in

What are the potential tax consequences of selling an old asset in an asset replacement investment decision?

Q: Why is it generally incorrect to consider interest charges when computing a

Why is it generally incorrect to consider interest charges when computing a project’s net cash flows?

Q: Distinguish between asset expansion and asset replacement projects. How does this

Distinguish between asset expansion and asset replacement projects. How does this distinction affect the capital expenditure analysis process?