Practice Capital Budgeting Process - 25.4 | 25. Capital Budgeting Techniques | Management 1 (Organizational Behaviour/Finance & Accounting)
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25.4 - Capital Budgeting Process

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the first step in the capital budgeting process?

💡 Hint: Think about how projects are started.

Question 2

Easy

True or False: Performance review is conducted before selecting the best project.

💡 Hint: Consider the order of the steps.

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 is the first step in the capital budgeting process?

  • Evaluation of Projects
  • Identification of Investment Opportunities
  • Performance Review

💡 Hint: Think about how projects are discovered.

Question 2

True or False: The last step in the capital budgeting process is financing the investment.

  • True
  • False

💡 Hint: Consider what happens after implementation.

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

Consider a tech company evaluating two projects: Project A which costs $150,000 and is expected to provide annual cash inflows of $50,000 for 4 years, and Project B which costs $200,000 with annual cash inflows of $70,000 for 3 years. Which project should they choose based on the NPV method if the discount rate is 10%?

💡 Hint: Remember to apply the NPV formula correctly while factoring in the discount rate.

Question 2

A company has implemented a project that expected to yield a cash inflow of $120,000 annually for 5 years. However, in the third year, an unforeseen expense reduces cash inflows to $80,000. How should the company adjust its performance review?

💡 Hint: Consider how unexpected expenses impact a project's financial health.

Challenge and get performance evaluation