Practice Capital Budgeting In Tech Companies (25.8) - Capital Budgeting Techniques

Practice: Capital Budgeting in Tech Companies

Lesson 25.8Capital Budgeting Techniques

Practise this section

10 questions

Flashcard drill
3 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
Sign up to start the exercise
Quiz
4 questions · about 3 min · pass mark 70%. Hints available.
Sign up to start the quiz

6 sample questions

Question 1.
What is the primary purpose of capital budgeting?
Show hintHide hint
Think about financial planning.
Question 2.
Name one technique used in capital budgeting.
Show hintHide hint
They are both methods for evaluating investments.
3Question 3.
What does NPV stand for?
Show hintHide hint
Think about the net worth of cash today vs future.
4Question 4.
Is IRR a measure of monetary value?
- True
- False
Show hintHide hint
Consider how rates view investments.
Question 5.
A tech startup is considering two projects: Project A requires $30,000 initial investment with annual cash inflows of $10,000 for four years. Project B requires $25,000 initial investment with annual cash inflows of $7,000 for five years. Calculate both NPV (assuming a 12% discount rate) and determine which project is better.
Show hintHide hint
Perform NPV for both projects and see which one yields a greater value.
Question 6.
A company is looking at a new AI project expected to generate cash inflows of $20,000 per year for 5 years, with an initial investment of $50,000. How would they calculate IRR, and what considerations might affect this calculation?
Show hintHide hint
Think about how cash flow variations impact the IRR computation.

6 more questions in this section. Enroll free to practise them all.