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Chapter 24: Capital Budgeting and Investment Analysis

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Financial & Managerial Accounting
Pages: 1064 - 1095

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60 Questions for Chapter 24: Capital Budgeting and Investment Analysis

  1. Google managers must select depreciation methods. Why does the use of the accelerated depreciation method (instead of straight-line) for income tax reporting increase an investment’s value?

    Found on Page 1083
  2. Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from its investments.

    Found on Page 1086
  3. Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. Project 2 requires an initial investment of $4 million and has a present value of cash flows of $6 million. Compute the profitability index for each project. Based on the profitability index, which project should the company prefer? Explain.

    Found on Page 1084
  4. The management of Samsung is planning to invest in a new companywide computerized inventory tracking system. What makes this potential investment risky?

    Found on Page 1083
  5. Following is information on two alternative investments being considered by Tiger Co. The company requires a 4% return from its investments.

    Found on Page 1087
  6. Following is information on an investment considered by Hudson Co. The investment has zero salvage value. The company requires a 12% return from its investments. Compute this investment’s net present value.

    Found on Page 1084
  7. The management of Google is planning to acquire new equipment to manufacture tablet computers. What are some of the costs and benefits that would be included in Google’s analysis?

    Found on Page 1083
  8. Refer to the information in Exercise 24-11 and instead assume the company requires a 12% return on its investments. Compute each project’s

    Found on Page 1087
  9. Refer to the information in QS 24-11 and instead assume the investment has a salvage value of $20,000. Compute the investment’s net present value.

    Found on Page 1084
  10. Apple is considering expanding a store. Identify three methods management can use to evaluate whether to expand.

    Found on Page 1083

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