Chapter 14—Capital Budgeting
LEARNING OBJECTIVES
LO 1 Why do most capital budgeting methods focus on cash flows?
LO 2 How is payback period computed, and what does it measure?
LO 3 How are the net present value and profitability index of a project measured?
LO 4 How is the internal rate of return on a project computed? What does it measure?
LO 5 How do taxation and depreciation methods affect cash flows?
LO 6 What are the underlying assumptions and limitations of each capital project
evaluation method
LO 7 How do managers rank investment projects?
LO 8 How is risk considered in capital budgeting analysis?
LO 9 How and why should management conduct a postinvestment audit of a capital
project?
LO 10 (Appendix 1) How are present values calculated?
LO 11 (Appendix 2) What are the advantages and disadvantages of the accounting rate
of return method?
QUESTION GRID
True/False
Difficulty Level Learning Objectives
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Difficulty Level Learning Objectives
Easy Mod Diff LO LO LO LO LO LO LO LO LO LO LO
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