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Practice Questions
Test your understanding with targeted questions related to the topic.
Question 1
Easy
What is capital budgeting?
💡 Hint: Think about planning long-term investments.
Question 2
Easy
Name one importance of capital budgeting.
💡 Hint: Consider who is making the investment decisions.
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 one of the primary goals of capital budgeting?
- Identifying market trends
- Evaluating investment projects
- Managing day-to-day operations
💡 Hint: Think about the role of significant financial decisions in a company.
Question 2
True or False: Investments made through capital budgeting can always be reversed without cost.
- True
- False
💡 Hint: Consider what happens when a large investment is made.
Solve and get performance evaluation
Challenge Problems
Push your limits with challenges.
Question 1
A company is considering investing in two projects: Project A, which requires a $1 million investment with expected returns of $200,000 annually for 8 years, and Project B, needing a $500,000 investment with expected returns of $150,000 annually for 4 years. If the company's required rate of return is 10%, calculate the NPV for both projects and decide which one to proceed with.
💡 Hint: Remember to use the NPV formula and ensure you understand how to apply the discount rate.
Question 2
A tech startup overestimated the returns on a new product venture and is experiencing financial strain. What capital budgeting principles could they have applied to avoid this situation? Discuss whether misalignment with strategic goals played a role.
💡 Hint: Reflect on how evaluating returns against risks can guide strategic investment.
Challenge and get performance evaluation