1. What is the difference between capital budgeting screening decisions and capital budgeting preference decisions?
2. What is meant by the term time value of money?
3. What is meant by the term net present value?
4. Why isn't depreciation on any equipment acquired as part of a project proposal used in the net present value and IRR methods of making capital budgeting decisions?
5. Why are discounted cash flow methods of making capital budgeting decisions superior to other methods?
6. What are the two simplifying assumptions in net present value analysis?
7. What is a post-audit? What are some benefits of conducting post-audits?
8. "If a company has to pay interest of 14% on long-term debt, then its cost of capital is 14%." Do you agree? Explain.