Question Details

The primary advantage to using accelerated 


1.	Although it is extremely difficult to make accurate forecasts of the revenues that a project will generate, projects' initial outlays and subsequent costs can be forecasted with great accuracy.  This is especially true for large product development projects.

a.	True
b.	False

2.	Since the focus of capital budgeting is on cash flows rather than on net income, changes in noncash balance sheet accounts such as inventory are not included in a capital budgeting analysis.
a.	True
b.	False

3.	If an investment project would make use of land which the firm currently owns, the project should be charged with the opportunity cost of the land.

a.	True
b.	False

4.	The primary advantage to using accelerated rather than straight-line depreciation is that with accelerated depreciation the present value of the tax savings provided by depreciation will be higher, other things held constant.

a.	True
b.	False

5.	Opportunity costs include those cash inflows that could be generated from assets the firm already owns if those assets are not used for the project being evaluated.
a.	True
b.	False


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