1371. Which of the following is not a capital budgeting decision?

A. Expansion program
B. Merger
C. Replacement of an asset
D. Inventory level *

1372 . A sound capital budgeting technique is based on ______.

A. Cash flows *
B. Accounting profit
C. Interest rate on borrowings
D. Last dividend paid

1373. Which of the following is not a relevant cost in capital budgeting ?

A. Sunk cost
B. Opportunity cost
C. Allocated overheads
D. Both A & C *

1374. Capital budgeting decisions are based on ________.

A. Incremental profit
B. Incremental cash flows *
C. Incremental assets
D. Incremental capital

1375. Which of the following does no effect cash flows proposal?

A. Salvage Value
B. Depreciation amount
C. Tax rate change
D. Method of project financing *

1376. Cash inflows from a project include ________.

A. Tax shield of Depreciation
B. After-Tax operating profits
C. Raising of funds
D. Both A & B *

1377. Which of the following is not true with reference capital budgeting ?

A. Capital budgeting is related to asset replacement decisions
B. Cost of capital is equal to minimum required return
C. Existing investment in a project is not treated as sunk cost *
D. Timing of cash flows is relevant

1378. Which of the following is not followed in capital budgeting ?

A. Cash flows principle
B. Interest exclusion principle
C. Accrual principle *
D. Post-tax principle

1379. Depreciation is incorporated in cash flows because it _______.

A. Is unavoidable cost
B. Is a cash flow
C. Reduced tax liability *
D. Involves an outflow

1380. Which of the following is not true for capital budgeting?

A. Sunk costs are ignored
B. Opportunity costs are excluded *
C. Incremental cash flows are considered
D. Relevant cash flows are considered