公司理财(英文版)题库8.doc

CHAPTER 8 Making Capital Investment Decisions I. DEFINITIONS INCREMENTAL CASH FLOWS a 1. 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 d. net present value e. erosion Difficulty level: Easy EQUIVALENT ANNUAL COST e 2. 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 COSTS c 3. A cost that has already been paid, or the liability to pay has already been incurred, is a(n): a. salvage value expense. b. net working capital expense. c. sunk cost. d. opportunity cost. e. erosion cost. Difficulty level: Easy OPPORTUNITY COSTS d 4. The most valuable investment given up if an alternative investment is chosen is a(n): a. salvage value expense. b. net working capital expense. c. sunk cost. d. opportunity cost. e. erosion cost. Difficulty level: Easy EROSION COSTS e 5. The cash flows of a new project that come at the expense of a firm’s existing projects are called: a. salvage value expenses. b. net working capital expenses. c. sunk costs. d. opportunity costs. e. erosion costs. Difficulty level: Easy PRO FORMA FINANCIAL STATEMENTS a 6. A pro forma 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 DEPRECIATION b 7. The depreciation method 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