Reference no: EM132706500

Problem 1: At the end of the capital rationing process, proposals that are selected for funding are included in the:

a.profit budget.
b.purchases budget.
c.capital expenditure budget.
d.sales budget.

Problem 2: Analyze if the investment in new equipment is profitable based on the information given below.

Cost of new equipment$66,000

Yearly expected cash flows to be received$20,000

Expected life4 years

Minimum desired rate of return10%

Present Value of an Annuity of $1 at 10% for 4 years3.170

a.The internal rate of return is greater than 10% and is not profitable.
b.The internal rate of return is less than 10% and is profitable.
c.The internal rate of return is greater than 10% and is profitable.
d.The internal rate of return is less than 10% and is not profitable.

Problem 3: The increase in general price levels in a rapidly growing economy is called:

a.reaffirmation.
b.inflation.
c.swaption.
d.deflation.