BMAL 590 ACCOUNTING EXAM QUESTIONS AND ANSWERS WIT COMPLETE SOLUTIONS 100% GUARANTEED PASS
Decisions to install new equipment, replace old equipment, and purchase or construct a new building are examples of
Capital investment analysis
Which of the following are present value methods of analyzing...
bmal 590 accounting exam questions and answers wit
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BMAL 590 ACCOUNTING EXAM QUESTIONS AND ANSWERS WIT
COMPLETE SOLUTIONS 100% GUARANTEED PASS
Decisions to install new equipment, replace old equipment, and purchase or construct a new building
are examples of
Capital investment analysis
Which of the following are present value methods of analyzing capital investment proposals?
Net present value and internal rate of return
By converting dollars to be received in the future into current dollars, the present value methods take
into consideration that money
has a time value
The primary advantages of the average rate of return method are its ease of computation and the fact
that
it emphasizes the amount of income earned over the life of the proposal
Which of the following can be used to place capital investment proposals involving different amounts
of investment on a comparable basis for purposes of net present value analysis?
Present value index
An analysis of a proposal by the net present value method indicated that the present value exceed the
amount to be invested. Which of the following statements best describe the results of this analysis?
, The proposal is desirable and the rate of return expected from the proposal exceeds the minimum rate
used for the analysis
In general, present value methods of analyzing capital investments are more desirable than methods
ignoring present value because
The present value methods consider that a dollar today is worth more than a dollar in the future due to
the potential earning power of that dollar
Which method of evaluating capital investment proposals uses the concept of present value to
compute a rate of return?
Internal rate of return
When several alternative investment proposals of the same amount are being considered, the one
with the largest net present value is the most desirable. If the alternative proposal involve different
amounts of investment, it is useful to prepare a relative ranking of the proposals by using a(n)
Present value index
Which method of evaluating capital investment proposals uses present value concepts to compute the
rate of return from the net cash flows expected from capital investment proposals?
Internal rate of return
The present value index is computed using which of the following formulas?
Total present value of net cash flow/Amount to be invested
Which of the following is a present value method of analyzing capital investment proposals?
Net present value
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