Evaluating a capital investment project

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Reference no: EM1313826

Multiple choice question based on cash flow statement.

1. Which methods of evaluating a capital investment project ignore the time value of money?

a. Net present value and accounting rate of return.

b. Accounting rate of return and internal rate of return.

c. Net present value and payback period.

d. Payback period and accounting rate of return.

e. Internal rate of return and payback period.

2. Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:

a. Indirect activities.

b. Investing activities.

c. Financing activities.

d. Operating activities.

e. Direct activities.

3. The statement of cash flows helps analysts evaluate the:

a. All of the above.

b. Means used to finance investing activities.

c. Source of cash for plant expansion.

d. Source of cash for debt repayments.

e. Differences between net income and net operating cash flow.

4. The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is:

a. Adjustments to net income.

b. Cash received from customers.

c. Increase (decrease) in accounts receivable.

d. Cash.

e. Net income.

Reference no: EM1313826

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