#45

If the capital budgeting decision includes a replacement analysis, then

	a gain from the sale of the old asset will represent a tax savings inflow.
	only incremental cash flows should be looked at.
	the sale price and tax savings will increase the cash inflows throughout the asset's life.
	two of the above.

44 Capital rationing assumes:

	A limited amount of capital is available.
	A limited amount of investments are available.
	Maximum profitability will be obtained.
	B and C.

42 If an investment project has a positive net present value, then the internal rate of return is

	indeterminate; it depends on the length of the project.
	greater than the cost of capital.
	less than the cost of capital.
	equal to the cost of capital.

41 In using the internal rate of return method, it is assumed that cash flows can be reinvested at

	the internal rate of return.
	the prevailing interest rate.
	the cost of equity.
	the cost of capital.

30 An asset fitting into the 10-year MACRS category was purchased 2 years ago for $150,000. The book value of this asset is now (Do not round intermediate calculations.)

	$108,000
	$102,800
	$112,600
	$122,200