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Capital Budgeting and Cost Analysis
Multiple Choice

These Multiple Choice questions are designed to help determine how well you have mastered the text material. Try to answer all of these questions without using your text or the Review Points. Instant feedback and coaching for incorrect answers is provided when you complete the quiz and submit answers for grading.

For additional study questions and more practice exercises, see the Student Guide and Review Manual (ISBN 013-039144-1). To order a copy for all chapters of Cost Accounting, Third Canadian Edition, please contact your Pearson Education Canada sale representative.

Select the best answer to each question.

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3 .       (CMA) Making the common assumption in capital-budgeting analysis that cash inflows occur in a lump sum at the end of individual years during the life of an investment project when, in fact, they flow more or less continuously during those years: 

4 .       (CPA adapted) The University of Windsor, a nonprofit organization, is considering the purchase of a machine costing $100,000. The machine's expected useful life is five years. The estimated annual cash flow is: $60,000 in year 1, $30,000 in year 2, $20,000 in year 3, $20,000 in year 4, and $20,000 in year 5. Assuming the cash flows will be received evenly during each year, the payback is: 

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