管理会计加里森第15版答案Chap013.docx

Chapter 13Capital Budgeting DecisionsSolutions to Questions13-1A capital budgeting screening decision is concerned with whether a proposed investment project passes a preset hurdle, such as a 15% rate of return. A capital budgeting preference decision is concerned with choosing from among two or more alternative investment projects, each of which has passed the hurdle.13-2The “time value of money” refers to the fact that a dollar received today is more valuable than a dollar received in the future simply because a dollar received today can be invested to yield more than a dollar in the future.13-3Discounting is the process of computing the present value of a future cash flow. Discounting gives recognition to the time value of money and makes it possible to meaningfully add together cash flows that occur at different times.13-4Accounting net income is based on accruals rather than on cash flows. Both the net present value and internal rate of return methods focus on cash flows.13-5Unlike other common capital budgeting methods, discounted cash flow methods recognize the time value of money and take into account all future cash flows.13-6Net present value is the present value of cash inflows less the present value of the cash outflows. The net present value can be negative if the present value of the outflows is greater than the present value of the inflows.13-7One assumption is that all cash flows occur at the end of a period. Another is that all cash inflows are immediately reinvested at a rate of return equal to the discount rate.13-8No. The cost of capital is not simply the interest paid on long-term debt. The cost of capital is a weighted average of the costs of all sources of financing, both debt and equity.13-9The internal rate of return is the rate of return on an investment project over its life. It is computed by finding the discount rate that results in a zero net present value for the project.13-10The cost of capital is a hurdle that must be cleared before