study rn

Which of the following statements is correct for a project with a negative NPV?

The cost of capital exceeds the IRR

Which of the following changes, if of a sufficient magnitude, could turn a negative NPV project into a positive NPV project?

A decrease in the fixed costs

A corporation is contemplating an expansion project. The CFO plans to calculate the project's NPV by discounting the relevant cash flows (which include the initial up-front costs, the operating cash flows, and the terminal cash flows) at the corporation's cost of capital (WACC). Which of the following factors should the CFO include when estimating the relevant cash flows?

Any opportunity costs associated with the project.

Jon Stevens, BNSF Vice President and Controller describes the capital spending process primarily as

a balancing act that requires careful evaluation of the costs and benefits of each project a means to ensure regulatory compliance

If a 20% reduction in forecast sales would not extinguish a project's profitability, then sensitivity analysis would suggest:

deemphasizing that variable as a critical factor.

What types of projects does the BNSF strategic studies team evaluate?

disceretionry

According to the article, "Sunk cost fallacy: Throwing good money after bad," how can banks limit losses from bad loans?

increase bank executive turnover

the relevant cash flows when considering a capital budgeting project.

lost rent from retail facility remodeling expenses for new store increase in inventory expected salvage value of manufacturing equipment

The primary purpose of capital budgeting is to:

maximize shareholder wealth

Projects that compete with one another so that the acceptance of one eliminates from further consideration all other projects that serve a similar function.

mutually exclusive

Capital rationing may be beneficial to a firm if it:

weeds out proposals with weaker or biased NPVs.