Practice Capital Budgeting in Tech Companies - 25.8 | 25. Capital Budgeting Techniques | Management 1 (Organizational Behaviour/Finance & Accounting)
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25.8 - Capital Budgeting in Tech Companies

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the primary purpose of capital budgeting?

💡 Hint: Think about financial planning.

Question 2

Easy

Name one technique used in capital budgeting.

💡 Hint: They are both methods for evaluating investments.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What does NPV stand for?

💡 Hint: Think about the net worth of cash today vs future.

Question 2

Is IRR a measure of monetary value?

  • True
  • False

💡 Hint: Consider how rates view investments.

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A tech startup is considering two projects: Project A requires $30,000 initial investment with annual cash inflows of $10,000 for four years. Project B requires $25,000 initial investment with annual cash inflows of $7,000 for five years. Calculate both NPV (assuming a 12% discount rate) and determine which project is better.

💡 Hint: Perform NPV for both projects and see which one yields a greater value.

Question 2

A company is looking at a new AI project expected to generate cash inflows of $20,000 per year for 5 years, with an initial investment of $50,000. How would they calculate IRR, and what considerations might affect this calculation?

💡 Hint: Think about how cash flow variations impact the IRR computation.

Challenge and get performance evaluation