Capital Budgeting and Depreciation Concepts

What is the study of a business's money-related decisions called?

• Corporate Finance

• Business Management

• Financial Accounting

• Economic Analysis

What is the goal of corporate finance?

• To maximize a business's value

• To minimize business expenses

• To increase employee satisfaction

• To reduce product prices

What does cash flow represent in a company?

• The representation of a company’s operating, investing, and financial activities over a period of time

• The total profit made by a company

• The number of employees in a company

• The amount of products sold by a company

What is the purpose of a cash flow statement report?

• To show how cash is spent and obtained in a company

• To list all company assets

• To calculate employee salaries

• To determine product pricing

What does depreciation refer to in accounting?

• Annual charge of a fixed asset against its book value

• Increase in asset value over time

• Total revenue generated by a company

• Number of products sold annually

What is the primary use of Discounted Cash Flow (DCF)?

• To determine the profitability of an investment opportunity

• To calculate the total revenue of a company

• To assess the market share of a business

• To evaluate employee performance

Which of the following is NOT a characteristic of Discounted Cash Flow (DCF)?

• It uses future free cash flow projections

• It is a static number

• It changes over time

• It discounts cash flows to arrive at a present value

What does the 'r' represent in the DCF formula?

• Revenue

• Rate of return

• Discount rate

• Risk factor

Operating Cash Flow (OCF) helps companies in which of the following ways?

• Expand and develop new products

• Increase employee salaries

• Reduce production costs

• Enhance marketing strategies

How is Operating Cash Flow (OCF) calculated?

• Net Income + Non-Cash Expense (Depreciation) + Changes in Working Capital

• Total Revenue - Total Expenses

• Net Profit + Depreciation - Taxes

• Gross Income - Operating Expenses