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公司理财试题9

Chapter 9: Making Capital Investment Decisions

CHAPTER 9

Making Capital Investment Decisions

I. DEFINITIONS

Topic: INCREMENTAL CASH FLOWS

1. The changes in the firm's future cash flows that are a direct consequence of accepting a project are

called:

A) Incremental cash flows.

B) Stand-alone cash flows.

C) Aftertax cash flows.

D) Net present value cash flows.

E) Erosion cash flows.

Answer: A

Topic: STAND-ALONE PRINCIPLE

2. The evaluation of a project based solely on its incremental cash flows is the basis of the:

A) Incremental cash flow method.

B) Stand-alone principle.

C) Dividend growth model.

D) Aftertax salvage value analysis.

E) Discounted payback method.

Answer: B

Topic: SUNK COSTS

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.

Answer: C

Topic: OPPORTUNITY COSTS

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.

Answer: D

Ross/Westerfield/Jordan, Essentials of Corporate Finance, 4/e 211