Question 1

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A relevant cost is one that will not change depending upon which alternative is selected.

	True
	False

Question 2

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The payback period method is the only method that focuses on net income rather than cash flow.

	True
	False

Question 3

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The internal rate of return uses cash flows rather than net income.

	True
	False

Question 4

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Which of the following is not another term for relevant costs?

		differential costs
		incremental costs
		opportunity costs
		avoidable costs

Question 5

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Which of the following capital budgeting methods focuses on net income rather than cash flows?

		Payback period
		Annual rate of return
		Net present value
		Internal rate of return

Question 6

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Which of the following are considered non-discounting approaches to capital budgeting?

		Accounting rate of return and internal rate of return
		Payback period and net present value
		Annual rate of return and payback period
		Net present value and internal rate of return

Question 7

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The minimum required rate of return for a project is the

		Annual rate of return.
		Accounting rate of return.
		Hurdle rate.
		Internal rate of return.

Question 8

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A short-term decision approach that focuses on differential costs and benefits is a(n)

		preference decision.
		capital decision.
		screening decision.
		incremental analysis.

Question 9

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A decision of whether to continue or to discontinue a particular product line is called a ____________________ decision.

		special order
		make or buy
		keep or drop
		sell or process further