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Chapter 14

Question 1 of 44

1

''Capital budgeting'' decisions, which involve the acquisition of (choose 3)

Select one or more of the following:

  • land

  • food

  • cars

  • air

  • buildings

  • equipment

Explanation

Question 2 of 44

1

Capital budgeting decisions, which involve the acquisition of land, buildings, and equipment, are among the most important decisions made by healthcare managers.

Select one of the following:

  • True
  • False

Explanation

Question 3 of 44

1

Capital budgeting

Select one of the following:

  • often involve large sums of money

  • often involve small sums of money

Explanation

Question 4 of 44

1

Second, they typically are costly to

Select one of the following:

  • reverse and extend over long periods of time.

  • reverse and intend over long periods of time.

Explanation

Question 5 of 44

1

Finally, they define the ____ direction of the business.

Select one of the following:

  • Finally, they define the strategic direction of the business.

  • Finally, they define the dull direction of the business.

Explanation

Question 6 of 44

1

proposed capital budgeting projects are ____ according to purpose and size

Select one of the following:

  • roposed capital budgeting projects are classified according to purpose and size

  • roposed capital budgeting projects are unclassified according to purpose and size

Explanation

Question 7 of 44

1

proposed capital budgeting projects are classified according to ___ and ___

Select one of the following:

  • purpose and assets

  • purpose and size

Explanation

Question 8 of 44

1

for example (choose 2)

Select one or more of the following:

  • expansion of existing services

  • expansion into no services

  • expansion into new services

Explanation

Question 9 of 44

1

investor-owned businesses, projects that are expected to ______ to shareholder wealth

Select one of the following:

  • not contribute

  • contribute

Explanation

Question 10 of 44

1

not-for-profit businesses, identifies a project’s expected ____ on the business’s financial condition

Select one of the following:

  • effect

  • stigma

Explanation

Question 11 of 44

1

financial analysis: estimate the cash flows

initial cash outlay (cost)
Operating flows
Terminal (ending) flow

Select one of the following:

  • estimate the cash non flow

  • estimate the cash flow

Explanation

Question 12 of 44

1

initial cash outlay (___)
Operating flows
Terminal (ending) flow

Select one of the following:

  • oraganization

  • cash

Explanation

Question 13 of 44

1

Initial cash outlay (cost)
Operating flows
Terminal (___) flow

Select one of the following:

  • continous

  • ending

Explanation

Question 14 of 44

1

financial analysis assess the project's

Select one of the following:

  • cost

  • riskiness

Explanation

Question 15 of 44

1

Estimate the project cost of capital (opportunity cost of capital or discount rate)

Select one of the following:

  • True
  • False

Explanation

Question 16 of 44

1

Estimate the project cost of capital (____ ____ of capital or discount rate)

Select one of the following:

  • discount cost

  • opportunity cost

Explanation

Question 17 of 44

1

Estimate the project cost of capital (opportunity cost of capital or ___ ___)

Select one of the following:

  • discount rate

  • expenses rate

Explanation

Question 18 of 44

1

financial analysis measures the ___ ___

Select one of the following:

  • financial effort

  • financial impact

Explanation

Question 19 of 44

1

Key Concepts in Cash Flow Estimation

Focus on cash flow as opposed to accounting income

Select one of the following:

  • True
  • False

Explanation

Question 20 of 44

1

Key Concepts in Cash Flow Estimation

Focus on __ __ as opposed to accounting income

Select one of the following:

  • old flow

  • cash flow

Explanation

Question 21 of 44

1

Cash flow timing

-Usually cash flows occur daily
-Often approximated by annual flows

Select one of the following:

  • True
  • False

Explanation

Question 22 of 44

1

Cash flow timing

-Usually cash flows occur ______
-Often approximated by annual flows

Select one of the following:

  • every 1 year

  • daily

Explanation

Question 23 of 44

1

Cash flow timing

-Usually cash flows occur daily
-Often approximated by ___ flows

Select one of the following:

  • Cash flow timing

    -Usually cash flows occur daily
    -Often approximated by annual flows

  • Cash flow timing

    -Usually cash flows occur daily
    -Often approximated by semi-annual flows

Explanation

Question 24 of 44

1

Project life

-Often unknown
-Often truncated if long (terminal value)

Select one of the following:

  • True
  • False

Explanation

Question 25 of 44

1

Project life

-Often ____
-Often truncated if long (terminal value)

Select one of the following:

  • known

  • unknown

Explanation

Question 26 of 44

1

Key Concepts in Cash Flow Estimation

-Do not include sunk costs
-Do include opportunity costs:
For capital
For other resources

Select one of the following:

  • True
  • False

Explanation

Question 27 of 44

1

Key Concepts in Cash Flow Estimation

- ____________________________
-Do include opportunity costs:
For capital
For other resources

Select one of the following:

  • does includes sunk costs

  • does not include sunk cost

Explanation

Question 28 of 44

1

Key Concepts in Cash Flow Estimation

-Do not include sunk costs
-Do include _________:
For capital
For other resources

Select one of the following:

  • opportunity costs

  • business costs

Explanation

Question 29 of 44

1

Inflation effects must be considered

Any strategic value implications must be considered

Select one of the following:

  • True
  • False

Explanation

Question 30 of 44

1

what 2 things must be considered?

Select one or more of the following:

  • deflation effects

  • inflation effects

  • non strategic value

  • strategic value

Explanation

Question 31 of 44

1

investment at t = 0 ( _ _ _ ) s

Select one of the following:

  • 123

  • 000

Explanation

Question 32 of 44

1

Investment at t = 0 (000s)

Select one of the following:

  • True
  • False

Explanation

Question 33 of 44

1

note that these cash flows are estimates

Select one of the following:

  • estimates

  • not estimates

Explanation

Question 34 of 44

1

If this were a replacement rather than a new (expansion) project, would the analysis change?

The relevant operating cash flows would be the same between the cash flows on the new and old project.

Select one of the following:

  • True
  • False

Explanation

Question 35 of 44

1

If this were a replacement rather than a new (expansion) project, would the analysis change?

The relevant operating cash flows would be ___ ___ between the cash flows on the new and old project.

Select one of the following:

  • the same

  • very different

Explanation

Question 36 of 44

1

However, selling the old equipment would produce an immediate cash inflow, but the salvage value at the end of its original life is foregone

Select one of the following:

  • cash inflow

  • cash outflow

Explanation

Question 37 of 44

1

There are many different approaches to breakeven in project analysis:

Time breakeven
Input variable breakeven

Select one of the following:

  • True
  • False

Explanation

Question 38 of 44

1

There are many different approaches to breakeven in project analysis:

Time breakeven
___ variable breakeven

Select one of the following:

  • input

  • output

Explanation

Question 39 of 44

1

There are many different approaches to breakeven in project analysis:

___ breakeven
Input variable breakeven

Select one of the following:

  • quality

  • time

Explanation

Question 40 of 44

1

time breakeven, which is measured by payback (or payback period).

Select one of the following:

  • True
  • False

Explanation

Question 41 of 44

1

time breakeven, which is measured by ---------- (or --------- period).

Select one of the following:

  • outback

  • payback

Explanation

Question 42 of 44

1

Advantages of Payback:

1. Easy to calculate and understand.
Provides an indication of a project’s risk and liquidity.

Disadvantages of Payback:

1. Ignores time value.
2. Ignores all cash flows that occur after the payback period.

Select one of the following:

  • True
  • False

Explanation

Question 43 of 44

1

Advantages of Payback:

1. ____ to calculate and understand.
Provides an indication of a project’s risk and ___
Disadvantages of Payback:

1. Ignores time value.
2. Ignores all cash flows that occur after the payback period.

Select one of the following:

  • hard, liquidity

  • easy, liquidity

Explanation

Question 44 of 44

1

Advantages of Payback:

1. Easy to calculate and understand.
Provides an indication of a project’s risk and liquidity.

Disadvantages of Payback:

1. Ignores ____ ___.
2. Ignores all cash flows that occur after the payback period.

Select one of the following:

  • time value

  • project risk

Explanation

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