Fundamentals of Financial Management, Third Edition

OBJECTIVE-TYPE QUESTIONS

1. Mark true or false.
   1. Depreciation has no impact on the after-tax cash flow.
   2. Opportunity cost is a part of the cash flow computation.
   3. In the case of mutually exclusive proposals, acceptance of one means rejection of the other.
   4. When two proposals are substitutes, acceptance of one will reduce the cash flow from the other.
   5. In complementary proposals, acceptance of one will reduce the cash flow from the other.
   6. A non-conventional cash flow pattern means cash outflow in the initial period and cash inflow during the subsequent period.
2. Choose the most suitable answer.
   1. Mutually exclusive proposals are:
      1. complementary in nature
      2. substitutes
      3. those where accepting one means rejecting the other
   2. Cash flow should exclude depreciation, ...