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- ________ of a project are those that will occur whether a company accepts or rejects a project. a. Opportunity costs b. Erosion costs c. Sunk costs d. Working capital costsWhich of the following would be considered a sunk cost? a. purchase price of new equipment b. warehouse lease expense c. equipment rental for the production area d. net book value of equipment that has no market valueWhen a firm has the opportunity to add a project that will utilize excess factory capacity (what is currently not being used), which costs should be used to determine if the added project should be undertaken?A Opportunity CostB Sunk Cost C Incremental CostsD None of the above
- Which of the following statements is incorrect?(a) Economic decisions arc time invariant.(b) Time and risk arc the most important factors in any in vestment evaluation.(c) For a large-seal!! engineering project. engineers must consider the impact of the project on the company·s financial statemen ts.( d) One of the primary roles of engineers is to make capital expenditure decisions.Under IFRS, what cost is specifically excluded from being capitalized as part of the cost of an investment property? Question 7 options: a) Delivery of materials needed for construction of an investment property. b) Standard wasted material costs incurred in the construction of an investment property. c) Losses incurred after construction is complete and before the property is fully occupied. d) Replacement of a key component of the investment property with more environmentally friendly parts.3) Which of the following statements correctly relates to project appraisal? A) Changes in working capital as a result of implementing a project should be included in the project appraisal. B) The costs of surveys and feasibility studies incurred prior to the decision to implement a project should be included in the project appraisal, as they are a cost of the project. C) The effect of a new project on other parts of a business is irrelevant when trying to decide whether to go ahead with the new project. D) Depreciation is a legitimate cost of a project and should be included in a project appraisal.
- Why would the cash payback method understate the value of a project with a large residual value? What are the major disadvantages of the use of the net present value method of analyzing capital investment proposals? Give examples of qualitative factors that should be considered in a capital investment analysis related to acquiring automated factory equipment.____ 61. If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a: a. debit balance and be underapplied b. debit balance and be overabsorbed c. credit balance and be overapplied d. debit balance and be overapplied ____ 62. 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? a. Internal rate of return b. Cash payback c. Net present value d. Average rate of return ____ 63. Which of the following is not a commonly used approach to setting transfer prices? a. Market price approach b. Revenue price approach c. Negotiated price approach d. Cost price approach ____ 64. The cost system best suited to industries that manufacture a large number of identical units of commodities on a continuous basis…Q45 Under which of the following cost approach limitations the economic value of human resources increases over time as the people gain experience but the capital cost diminishes through amortization process and hence becomes difficult to reconcile it. a. Standard cost b. Replacement cost c. Opportunity cost d. Historical cost
- Which of the following would be an argument for using the gross cost of plant and equipment as part of operating assets in return on investment computations? It eliminates the age of equipment as a factor in ROI computations. It is consistent with the computation of net operating income, which includes depreciation as an operating expense. It discourages the replacement of old, worn-out equipment because of the dramatic, adverse effect on ROI. It is consistent with the balance sheetWhich of the following is NOTa relevant cash flow and thus should not be reflected in the analysis of a capital budgeting project? a. Shipping and installation costs. b. Cannibalization effects. c. Opportunity costs. d. Sunk costs that have been expensed for tax purposes. e. Changes in net working capital. Please explain your answer for better understanding.When determining the best time to replace an existing asset, for what reason would you need to use marginal analysis?a. To determine what the most appropriate tax rate for the project should beb. To estimate the cost of capital for the new assetc. To determine if the defender asset should be used beyond its ESL.d. To determine the length of time the challenger asset should be used once it is placed into service.