1. The money that a business spends in the course of business can be divided into two categories:
a. research and development. b. inventory and expenses. c. capital improvements and new ventures. d. short- and long-term funds.
2. Terminal value assumptions can lead to bad capital budgeting decisions because:
a. nothing lasts forever. b. almost all growth assumptions are unreasonable. c. almost any project can be made to look good with an aggressive terminal value assumption. d. the mathematics are tricky and difficult to understand.