怀尔德会计学原理第21版课后习题答案SMChap025.doc

答案家 免费找答案 PAGE 1494 ?2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Fundamental Accounting Principles, 21st Edition PAGE 1463 ?2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Solutions Manual, Chapter 25 Chapter 25 Capital Budgeting and Managerial Decisions QUESTIONS 1. Capital budgeting decisions require careful analysis because they are generally the most difficult and risky decisions that management faces. Capital budgeting is the process of planning the acquisition or sale of plant assets. 3. Capital budgeting decisions are risky because: (1) the outcomes are uncertain, (2) large amounts of money are usually involved, (3) the investment involves a long-term commitment, and (4) the decisions may be difficult or impossible to reverse. 4. The payback period ignores both the present value of cash flows and all cash flows after the payback period. 5. A shorter payback period is desirable because management prefers to reduce the risk that the investment might not be profitable over the long run. As a result of acquiring assets with shorter payback periods, a company is both less vulnerable to inaccurate long-term predictions of future cash flows and is less subject to changes in external factors that might adversely affect the investment project. 6. If net income is earned evenly throughout each year and straight-line depreciation is used, the average investment is the original cost plus the salvage value, divided by 2. For this machine, the average investment equals $110,000, computed as ($200,000 + $20,000)/ 2