Business Finance Chapter 6 Review

The process of selecting long-term assets is called capital budgeting.

• True

• False

For capital budgeting purposes, depreciation is considered a cash outflow.

• True

• False

One benefit of using debt is that it allows a business to keep its own funds available for other uses.

• True

• False

Every organization attempts to maximize its WACC.

• True

• False

If a company is evaluating several capital projects, it should select the one with the lowest NPV.

• True

• False

A centralized organizational structure generally allows for better control but may lack needed flexibility.

• True

• False

Involving local ownership or employing local management are two techniques that can be used to reduce international business risk.

• True

• False

Which of the following would NOT be considered intellectual property?

• patents

• copyrights

• books

• all are intellectual propert

The Solar Software Company has decided to build a new, on-site day care center to improve employee morale and productivity. This project would MOST likely be categorized as which type of capital project?

• social benefit

• replacement

• government required

• cost savings

A company decision to purchase new delivery trucks resulted in the need to build a new loading dock to handle the different design of the vehicles. This situation is an example of

• independent projects

• complementary projects

• mutually exclusive projects

• unnecessary projects