Which of the following is a criticism of return on investment?
1. Which of the following is a criticism (or are criticisms) of the traditional capital budgeting approach? a. Intangible benefits are ignored or do not receive enough emphasis. 2. Which of the concepts below addresses the implications of not investing in a capital budgeting project? a. the product life cycle concept. 3. The portfolio concept related to investment management and product life cycle management a. considers a company’s investments projects as a whole rather than as separate and unrelated. 4. Which of the following measurements requires using the cost of capital? a. The accounting rate of return. 5. When the present value of the cash inflows is equal to the present value of the cash outflows a. the accounting rate of return is equal to the internal rate of return. 6. Which of the following concepts is more closely related to the concept of opportunity cost? a. Activity based costing. 7. Assume that compound interest depreciation is used for automated equipment, rather than straight line depreciation, or one of the accelerated depreciation methods. If the expected cash flows for the first project year of a project are as planned in the discounted cash flow capital budgeting analysis, a. the accounting rate of return will be equal to the internal rate of return. 8. The implications of using the moving baseline concept in an investment analysis are that a. the internal rate of return calculated in a traditional capital budgeting analysis tends to be too low. 9. If the net present value calculated for an investment project is zero, the a. accounting rate of return is zero. 10. Which of the following most accurately reflects the level of technological risk for three investment strategies? Type of StrategyLevel ofTechnological Riska.Proactive Responsive ReactiveMedium Low Highb.Proactive Responsive ReactiveLow Medium Highc.Proactive Responsive ReactiveLow Low Highd.Proactive Responsive ReactiveHigh Medium Low 11. Which of the following most accurately reflects the level of market risk for three investment strategies? Type of StrategyLevel ofMarket Riska.Proactive Responsive ReactiveMedium Low Highb.Proactive Responsive ReactiveLow Medium Highc.Proactive Responsive ReactiveLow High Highd.Proactive Responsive ReactiveHigh Medium Low 12. In a capital budgeting analysis the cost of capital is a. the weighted average cost of debt and equity capital. 13. In a capital budgeting analysis, if the net present value is less than zero a. the internal rate of return is less than the cost of capital. 14. In a capital budgeting analysis, if the net present value is equal to zero a. the internal rate of return is less than the cost of capital. 15. In a capital budgeting analysis, if the net present value is greater than zero a. the internal rate of return is less than the cost of capital. 16. In a capital budgeting analysis, if the internal rate of return is less than the cost of capital a. the investment should be rejected from the cash flow perspective. 17. In a capital budgeting analysis, if the internal rate of return is greater than the cost of capital a. the investment should be rejected from the cash flow perspective. 18. The accounting rate of return a. is not adjusted for the time values of money. 19. Part of the conflict between discounted cash flow (DCF) methods and investing in automation and computer integrated systems is that a. many benefits from these investments are long term and appear insignificant because of discounting. 20. In an investment analysis, a company using the moving baseline concept a. would adjust the analysis for an expected change in the competitive environment. 21. The multiple attribute decision model described in the CAM-I conceptual design excludes the following factor or factors. a. financial quantitative. 22. A situation where deferring investments reduces a firm's profitability and their incentive to invest is referred to as a. the moving baseline problem. 23. Considering a mix of investment strategies including proactive, responsive, and reactive is part of a. the portfolio investment concept. 24. Which of the following organizational characteristics are consistent with the investment management concept? |