UNIT 4 QUIZ
Question 11. Question : When evaluating capital budgeting
decision models, the payback
period emphasizes:
Student Answer:
Liquidity.
Profitability.
Cost of capital.
Average net income divided by average investment.
Average after-tax cash inflow divided by average investment.
Question 12. Question : In a discounted cash flow (DCF)
analysis, a required incremental
investment in net working capital:
Student Answer:
Should be amortized over the useful life of the equipment.
Can be disregarded because the same amount of cash will be