WorksheetsCAPITAL BUDGETING
Total questions: 10
Worksheet time: 5mins
1. It involves choosing projects that add value to a company.
Capital Gaining
Capital Budgeting
Operating Activities
Financing Activities
2. It is the potential loss from a missed opportunity-the result of choosing one alternative and forgoing another.
Opportunity Cost
Cost of Debt
Cost of equity
Sunk Cost
3. The following are the techniques in capital budgeting, EXCEPT:
Net Present Value (NPV)
Internal Rate of Return
Payback Period
Discounted Cash flow
4. The first step in calculating the NPV is to solve for the Present Value of cash inflows. What is the formula in solving Present Value?
FV/ (1 + n)^k
FV/ (1 + k) ^n
FV (1 + k)^n
FV (1 + n) ^k
5. What is the most intuitive and accurate valuation approach to capital budgeting problems?
NPV
IRR
Profitability Index
Payback Period
6. It is a prediction of how much inflow and outflow of cash business will have at any given time.
Operating Activities
Capital Budgeting
Cash Flow Estimation
Risk Analysis
7. If discount rate is greater than internal rate of return, the NPV is ____?
Positive
Negative
Zero
No Value
8. What is the risk a company would have of the company had only one project?
Stand-alone Risk
Market Risk
Corporate risk
Bank risk
What is the process of changing one or more variables to determine how sensitive a projects' returns are to these changes?
Scenario Analysis
Sensitivity Analysis
Simulation Analysis
Beta Estimation
This approach involves the determination of what happens to NPV estimates when we ask what-if questions?
Scenario Analysis
Sensitivity Analysis
Simulation Analysis
Beta Estimation
