Practice Summary - 25.9 | 25. Capital Budgeting Techniques | Management 1 (Organizational Behaviour/Finance & Accounting)
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Practice Questions

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Question 1

Easy

What is the Payback Period?

💡 Hint: Think about the time until you break even on your investment.

Question 2

Easy

Why is capital budgeting important?

💡 Hint: Consider its effect on future growth.

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 capital budgeting involve?

  • Planning and managing short-term investments
  • Evaluating long-term investments
  • Assessing employee performance

💡 Hint: Focus on the time frame of investments.

Question 2

True or False: NPV calculations ignore cash flows after the payback period.

  • True
  • False

💡 Hint: Remember NPV's comprehensive approach.

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Challenge Problems

Push your limits with challenges.

Question 1

A company is considering an expansion project costing $500,000, expected to generate $150,000 annually for 5 years. Calculate its Payback Period and discuss if it should proceed based on this metric.

💡 Hint: Remember, assess both Payback Period and NPV for better decisions.

Question 2

Suppose a project costs $200,000 and has a 10% required rate of return. It is expected to produce cash inflows of $70,000 in Year 1 and $150,000 in Year 2. Calculate NPV and advise if the project should be accepted.

💡 Hint: Ensure you discount future cash flows accurately.

Challenge and get performance evaluation