# on 03-Jan-2017 (Tue)

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If there are no restrictions on trade, then members of an open economy can buy and sell goods and services at the price prevailing in the world market, the [...]

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d>An open economy , is an economy that trades with other countries. If there are no restrictions on trade, then members of an open economy can buy and sell goods and services at the price prevailing in the world market, the world price .<html>

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2.1. Basic Terminology

#### Flashcard 1428074401036

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#derecho #introduccion-al-derecho
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las normas en general derivan del [...]
Derecho natural

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las normas en general derivan del Derecho natural y de éste resultan o emanan las leyes naturales y las leyes sociales,

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1.3LA NORMA
Antes de profundizar en el tema de la norma, es pertinente mencionar que las normas en general derivan del Derecho natural y de éste resultan o emanan las leyes naturales y las leyes sociales, como se explicará a detalle en el siguiente apartado. Ahora bien, el Derecho depende de la norma, de la sanción que el Estado impone a los ciudadanos para la convivencia

#### Flashcard 1432995368204

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#13-dic-2016 #mural
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El aumento del diesel podría ser trasladado al costo del flete, el cual podría subir entre [...] por ciento.
6 y 8

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de la Cámara Nacional del Autotransporte de Carga, el precio del diesel subirá entre 15 y 20 por ciento para el siguiente año. Este aumento, considera la Cámara, podría ser trasladado al costo del flete, el cual podría subir entre <span>6 y 8 por ciento, pero eso dependerá de las negociaciones que cada transportista logre con sus clientes.<span><body><html>

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Encarecerá combustible mercancías
Para 2017 se espera que se encarezcan las mercancías por efecto del gasolinazo. Según estimaciones de la Cámara Nacional del Autotransporte de Carga, el precio del diesel subirá entre 15 y 20 por ciento para el siguiente año. Este aumento, considera la Cámara, podría ser trasladado al costo del flete, el cual podría subir entre 6 y 8 por ciento, pero eso dependerá de las negociaciones que cada transportista logre con sus clientes. Refugio Muñoz, vicepresidente ejecutivo de ese órgano empresarial, explicó que el combustible representa, en promedio, entre 30 y 35 por ciento de los costos operativos de lo

#### Flashcard 1433116478732

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#4-3-the-investment-opportunity-set #cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-5-consumer-equilibrium #study-session-4
Question

Currently, a consumer is buying both sorbet and gelato each week. His MRSGS [marginal rate of substitution of gelato (G) for sorbet (S)] equals 0.75. The price of gelato is €1 per scoop, and the price of sorbet is €1.25 per scoop.

• Determine whether the consumer is currently optimizing his budget over these two desserts. Justify your answer.
In this example, the condition for consumer equilibrium is MRSGS = PG /PS. Because PG /PS = 0.8 and MRSGS = 0.75, the consumer is clearly not allocating his budget in a way that maximizes his utility, subject to his budget constraint.

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Consumer Equilibrium Currently, a consumer is buying both sorbet and gelato each week. His MRS GS [marginal rate of substitution of gelato (G) for sorbet (S)] equals 0.75. The price of gelato is €1 per scoop, and the price of sorbet is €1.25 per scoop. Determine whether the consumer is currently optimizing his budget over these two desserts. Justify your answer. ​Explain whether the consumer should buy more sorbet or more gelato, given that he is not currently optimizing his budget. Solution to 1: In this example, the

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5. CONSUMER EQUILIBRIUM: MAXIMIZING UTILITY SUBJECT TO THE BUDGET CONSTRAINT
on is less than the price ratio—meaning that the price for that additional unit is above her willingness to pay. Even though she could afford bundle c, it would not be the best use of her income. EXAMPLE 5 <span>Consumer Equilibrium Currently, a consumer is buying both sorbet and gelato each week. His MRS GS [marginal rate of substitution of gelato (G) for sorbet (S)] equals 0.75. The price of gelato is €1 per scoop, and the price of sorbet is €1.25 per scoop. Determine whether the consumer is currently optimizing his budget over these two desserts. Justify your answer. Explain whether the consumer should buy more sorbet or more gelato, given that he is not currently optimizing his budget. Solution to 1: In this example, the condition for consumer equilibrium is MRS GS = P G /P S . Because P G /P S = 0.8 and MRS GS = 0.75, the consumer is clearly not allocating his budget in a way that maximizes his utility, subject to his budget constraint. Solution to 2: The MRS GS is the rate at which the consumer is willing to give up sorbet to gain a small additional amount of gelato, which is 0.75 scoops of sorbet to gain one scoop of gelato. The price ratio, P G /P S (0.8), is the rate at which he must give up sorbet to gain an additional small amount of gelato. In this case, the consumer would be better off spending a little less on gelato and a little more on sorbet. 5.2. Consumer Response to Changes in Income: Normal and Inferior Goods The consumer’s behavior is constrained by his income a

#### Flashcard 1438091709708

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#italian #italian-grammar
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The (how many) [...] main ways in which verbs can express actions or events are known as moods.
seven

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The seven main ways in which verbs can express actions or events are known as moods. The four finite moods – all of which, except the imperative, have a full range of tenses – are: the indicative

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#### Flashcard 1438143352076

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The "budget" is aplan which details [...] during a future period.
projected cash inflows and outflows

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Subject 1. Capital Budgeting: Introduction
ssets) whose cash flows are expected to extend beyond one year. Managers analyze projects and decide which ones to include in the capital budget. "Capital" refers to long-term assets. The "budget" is a <span>plan which details projected cash inflows and outflows during a future period. The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual pro

#### Flashcard 1438152002828

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Which questions should you ask in the "Planning the capital budget" step?

How does the project [...]

What's the [...]
fit within the company's overall strategies?

timeline and priority?

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The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. <span>How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
include in the capital budget. "Capital" refers to long-term assets. The "budget" is a plan which details projected cash inflows and outflows during a future period. <span>The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. Project classifications: Replacement projects. There are two types of replacement d

#### Flashcard 1438154362124

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The post-audit is a [...] of [...] decisions.

follow-up of capital budgeting decisions

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osals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a <span>follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Im

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
include in the capital budget. "Capital" refers to long-term assets. The "budget" is a plan which details projected cash inflows and outflows during a future period. <span>The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. Project classifications: Replacement projects. There are two types of replacement d

#### Flashcard 1438156721420

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The post-audit is a [...] of capital budgeting. (regarding importance)

key element

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ility, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a <span>key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Improve forecasts (base

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
include in the capital budget. "Capital" refers to long-term assets. The "budget" is a plan which details projected cash inflows and outflows during a future period. <span>The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. Project classifications: Replacement projects. There are two types of replacement d

#### Flashcard 1438159080716

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In monitoring and post-auditing decision-makers can:​

Improve [...] thus making capital decisions well-implemented.

operations

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he post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: <span>Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span><body><html>

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
include in the capital budget. "Capital" refers to long-term assets. The "budget" is a plan which details projected cash inflows and outflows during a future period. <span>The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. Project classifications: Replacement projects. There are two types of replacement d

#### Annotation 1438161440012

Project classifications:

• Replacement projects. There are two types of replacement decisions:

• Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis.
• Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required.

The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements.

• Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects.

• Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing.

• Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast).

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438162488588

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Project classifications:
• Replacement projects.
• Expansion projects.
• [...]
• Others.
Regulatory, safety and environmental projects.

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e cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. <span>Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These proj

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438164847884

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Replacement projects.

There are two types of replacement decisions:

• to [...]
• to reduce costs.

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Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysi

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438167207180

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Replacement decisions to maintain a business. The issue is twofold: [...]? If yes, should the same processes continue to be used?

should the existing operations be continued?

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ject classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: <span>should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects d

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Annotation 1438168780044

#biochem
Th e 2ʹ-OH group in an RNA nucleotide can attack and break the phosphodiester linkage at the 3ʹ position, as shown in Figure 1.26. DNA lacks the 2ʹ-OH group, and so DNA is more chemically stable

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#### Flashcard 1438171139340

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Replacement decisions to maintain a business. [...] are usually made without detailed analysis.
Maintenance decisions

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types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? <span>Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisio

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438175857932

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Replacement decisions to reduce costs. These decisions are discretionary and a [...] is usually required.

detailed analysis

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be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a <span>detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from sell

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438178217228

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The [...] from the old asset must be considered in replacement decisions.

cash flows

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analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The <span>cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial inves

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438180576524

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Specifically, in a [...], the cash flows from selling old assets should be used to offset the initial investment outlay.

replacement project

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replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a <span>replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438182935820

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• Replacement projects.

Analysts also need to compare (3things) [...] before and after the replacement to identify changes in these elements.

revenue/cost/depreciation

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he cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare <span>revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets i

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438185295116

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Projects concerning expansion into new products, or markets involve [...] and explicit forecasts of future demand, and thus require detailed analysis.

strategic decisions

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sts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve <span>strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmen

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438187916556

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Question

• Expansion projects projects are more [...] than [...] projects.

more complex

replacement

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ments. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are <span>more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing.

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Annotation 1438189489420

#biochem
Glycine (Gly, G), with just a hydrogen atom as its sidechain, is the simplest of the 20 amino acids. It can be grouped with the hydrophobic amino acids or treated as the sole member of a fourth class because of its special properties. Th ese arise from the absence of a bulky sidechain, which allows glycine to adopt three- dimensional conformations that are energetically unfavorable for other amino acids, so that segments of protein chains that contain glycine can be much more fl exible than those that do not.

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#### Flashcard 1438191848716

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Question

• Regulatory, safety and environmental projects are [...], and are often non-revenue-producing.

mandatory investments

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olve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are <span>mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438194208012

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Question

Others. Some projects need special considerations beyond traditional capital budgeting analysis for example, a very [...] in which cash flows cannot be reliably forecast.

risky research project

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ty and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very <span>risky research project in which cash flows cannot be reliably forecast). <span><body><html>

#### Original toplevel document

Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>

#### Flashcard 1438197353740

Tags
#narm #trauma
Question
What are the core capasities essentials to well bing with each core need (Connection, attunment, trust, autonomy and love)
 Connection Capacity to be in touch with your body and your emotions. Capcity to be in connection with others. Attunment Capacity to attune to our needs and emotions. Capacity to recongize, reach out for, and take in physical and emotinal nourshment Trust Capacity for healthy dependence and interdependence Autonomy Capacity to set approprate boundaries. Capacity to say no and set limits, Capacity to speak our mind w/o guilt or fear Love/Sex Capacity to live with an open heart. Capacity to integrat a loing relationship with a vital sexuality.

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#### Flashcard 1438199188748

Question
What are the core difficulties with the 5 adaptive survival styles?
Core Difficulties for the 5 Adaptive Survival Styles
ConnectionDisconnected from physical and emotional Sealf. Difficulty realitng to others
AttunmentDifficulty knowing what we need. Feeling our needs do not deserve to be met
TrustFeeling we cannot depend on anyone but ourselves. Feelng we have to always be in contorl.
AutonomyFeeling burden and pressured. Difficulty setting limits and saying "no" directly
Love n SexDifficulty integrating heart and sexuality. Self esteem based on looks and performance.

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#### Flashcard 1438214130956

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#vocabulary
Question
Offset definition
something that counterbalances, counteracts, or compensates for something else; compensating equivalent.

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Article 1438220160268

Gasolinas, dólar y precios
#3-ene-2017 #el-financiero #enrique-quintana #noticias

Si nos quitamos un poco el enojo –sin duda justificable- y vemos los hechos objetivos, podremos entender por qué subieron los precios de las gasolinas y cuáles son las implicaciones que tendrá el aumento, así como los escenarios previsibles… algo más útil que echarse a perder el hígado. 1-¿Por qué subió la gasolina? La razón es muy simple: porque cuesta más. En noviembre se vendieron 828 mil barriles diarios de gasolinas automotrices y se produjeron en el país 254 mil barriles de ese tipo de productos. Esto quiere decir que se importó alrededor del 70 por ciento de las gasolinas que se vendieron en el país. Y resulta, que la gasolina regular en la Costa del Golfo en Estados Unidos, de donde se importa la mayoría de la que se consume en México, aumentó 18.2 por ciento en dólares en el curso del 2016. Esto significa que en pesos se incrementó en alrededor de 41 por ciento. El incremento promedio de ese tipo de gasolina en México fue de 17.8 por ciento el año pasado. 2- ¿No es cierto que la gasolina subió

#### Flashcard 1438221470988

Tags
#3-ene-2017 #el-financiero #enrique-quintana #noticias
Question
¿Por que subio la gasolina?
La razón es muy simple: porque cuesta más.

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Gasolinas, dólar y precios
emos entender por qué subieron los precios de las gasolinas y cuáles son las implicaciones que tendrá el aumento, así como los escenarios previsibles… algo más útil que echarse a perder el hígado. 1-¿Por qué subió la gasolina? <span>La razón es muy simple: porque cuesta más. En noviembre se vendieron 828 mil barriles diarios de gasolinas automotrices y se produjeron en el país 254 mil barriles de ese tipo de productos. Esto quiere decir que se importó alred

#### Flashcard 1438223830284

Tags
#3-ene-2017 #el-financiero #enrique-quintana #noticias
Question
En noviembre se se importó alrededor del [...] por ciento de las gasolinas que se vendieron en el país.
70

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Gasolinas, dólar y precios
La razón es muy simple: porque cuesta más. En noviembre se vendieron 828 mil barriles diarios de gasolinas automotrices y se produjeron en el país 254 mil barriles de ese tipo de productos. Esto quiere decir que se importó alrededor del <span>70 por ciento de las gasolinas que se vendieron en el país. Y resulta, que la gasolina regular en la Costa del Golfo en Estados Unidos, de donde se importa la mayoría de la que se consume

#### Annotation 1438226189580

#3-ene-2017 #el-financiero #enrique-quintana #noticias
La gasolina regular en la Costa del Golfo en Estados Unidos, de donde se importa la mayoría de la que se consume en México, aumentó 18.2 por ciento en dólares en el curso del 2016. Esto significa que en pesos se incrementó en alrededor de 41 por ciento. El incremento promedio de ese tipo de gasolina en México fue de 17.8 por ciento el año pasado

Gasolinas, dólar y precios
28 mil barriles diarios de gasolinas automotrices y se produjeron en el país 254 mil barriles de ese tipo de productos. Esto quiere decir que se importó alrededor del 70 por ciento de las gasolinas que se vendieron en el país. Y resulta, que l<span>a gasolina regular en la Costa del Golfo en Estados Unidos, de donde se importa la mayoría de la que se consume en México, aumentó 18.2 por ciento en dólares en el curso del 2016. Esto significa que en pesos se incrementó en alrededor de 41 por ciento. El incremento promedio de ese tipo de gasolina en México fue de 17.8 por ciento el año pasado. 2- ¿No es cierto que la gasolina subió porque el gobierno cobra más impuestos por ella? No, no es cierto. El ingreso que el gobierno obtiene de la venta de gasolinas au

#### Annotation 1438228548876

#3-ene-2017 #el-financiero #enrique-quintana #noticias
¿No es cierto que la gasolina subió porque el gobierno cobra más impuestos por ella?
No, no es cierto. El ingreso que el gobierno obtiene de la venta de gasolinas automotrices –además del IVA, como el que obtiene en la mayoría de los productos- es el IEPS a las gasolinas. En 2016, hasta el mes de noviembre, se obtuvieron 263 mil millones de pesos por este concepto. Lo previsto obtener para 2017 para ese periodo en el Presupuesto es de 252 mil millones de pesos a precios constantes del 2016. Es decir, en términos reales, el gobierno va a obtener 4.1 por ciento menos por IEPS a gasolinas que el año pasado. Así que el incremento de las gasolinas no implica mayores ingresos para el gobierno.

Gasolinas, dólar y precios
co, aumentó 18.2 por ciento en dólares en el curso del 2016. Esto significa que en pesos se incrementó en alrededor de 41 por ciento. El incremento promedio de ese tipo de gasolina en México fue de 17.8 por ciento el año pasado. 2- <span>¿No es cierto que la gasolina subió porque el gobierno cobra más impuestos por ella? No, no es cierto. El ingreso que el gobierno obtiene de la venta de gasolinas automotrices –además del IVA, como el que obtiene en la mayoría de los productos- es el IEPS a las gasolinas. En 2016, hasta el mes de noviembre, se obtuvieron 263 mil millones de pesos por este concepto. Lo previsto obtener para 2017 para ese periodo en el Presupuesto es de 252 mil millones de pesos a precios constantes del 2016. Es decir, en términos reales, el gobierno va a obtener 4.1 por ciento menos por IEPS a gasolinas que el año pasado. Así que el incremento de las gasolinas no implica mayores ingresos para el gobierno. 3- ¿Cuál es el impacto que tendrá el incremento de las gasolinas en la inflación? El incremento de los precios de las gasolinas impactará en 0.6 puntos porcentuales de m

#### Annotation 1438230121740

#3-ene-2017 #el-financiero #enrique-quintana #noticias
¿Cuál es el impacto que tendrá el incremento de las gasolinas en la inflación?
El incremento de los precios de las gasolinas impactará en 0.6 puntos porcentuales de manera directa en el índice de precios al consumidor. Esto quiere decir que, en el caso del mes de enero, el incremento de la inflación podría ser del orden de 1.0 a 1.1 por ciento mensual. Esto quiere decir que la inflación anual al término del primer mes de este año será del orden de 4.2 por ciento. Diversos analistas consideran que hacia el término del primer semestre la inflación, considerando los efectos indirectos del alza, podría llegar al 5 por ciento, para terminar el año en algo así como 4.5 por ciento. Ese nivel es equiparable al que teníamos en mayo del 2013 y estaría apenas a la mitad del nivel con el que comenzó el gobierno de Fox.

Gasolinas, dólar y precios
recios constantes del 2016. Es decir, en términos reales, el gobierno va a obtener 4.1 por ciento menos por IEPS a gasolinas que el año pasado. Así que el incremento de las gasolinas no implica mayores ingresos para el gobierno. 3- <span>¿Cuál es el impacto que tendrá el incremento de las gasolinas en la inflación? El incremento de los precios de las gasolinas impactará en 0.6 puntos porcentuales de manera directa en el índice de precios al consumidor. Esto quiere decir que, en el caso del mes de enero, el incremento de la inflación podría ser del orden de 1.0 a 1.1 por ciento mensual. Esto quiere decir que la inflación anual al término del primer mes de este año será del orden de 4.2 por ciento. Diversos analistas consideran que hacia el término del primer semestre la inflación, considerando los efectos indirectos del alza, podría llegar al 5 por ciento, para terminar el año en algo así como 4.5 por ciento. Ese nivel es equiparable al que teníamos en mayo del 2013 y estaría apenas a la mitad del nivel con el que comenzó el gobierno de Fox. 4- ¿De qué va a depender la evolución de los precios de las gasolinas en el año? De lo que pase con los precios internacionales del petróleo y con el tipo de cambio. Si

Article 1438231694604

Propone IP plan para 2017
#3-ene-2017 #el-financiero #noticias

Los empresarios propusieron ayer una serie de medidas económicas de aplicación inmediata para contrarrestar la inflación, promover la inversión y defender el empleo en el país. El sector empresarial propuso una estrategia para hacer frente a los retos internos y externos del país, entre los que se encuentran el combate a la inflación, promover la inversión y defender el empleo. e acuerdo con el Consejo Coordinador Empresarial (CCE), el alza en el precio de las gasolinas generará una presión adicional sobre la economía interna. Por ello, propuso un paquete de 23 medidas de política económica en materia fiscal, gasto e ingresos; política monetaria; inversión y empleos y banca de desarrollo. Por ejemplo, en el área fiscal formula que se garantice un superávit primario, que se reduzca la deuda del gobierno federal, así como establecer mecanismos para evitar un impacto del incremento de la gasolina en transporte público de personas. En cuestiones de política económica, los empresarios plantean que

#### Annotation 1438233005324

#3-ene-2017 #el-financiero #noticias
El sector empresarial propuso una estrategia para hacer frente a los retos internos y externos del país, entre los que se encuentran el combate a la inflación, promover la inversión y defender el empleo.

Propone IP plan para 2017
Los empresarios propusieron ayer una serie de medidas económicas de aplicación inmediata para contrarrestar la inflación, promover la inversión y defender el empleo en el país. El sector empresarial propuso una estrategia para hacer frente a los retos internos y externos del país, entre los que se encuentran el combate a la inflación, promover la inversión y defender el empleo. e acuerdo con el Consejo Coordinador Empresarial (CCE), el alza en el precio de las gasolinas generará una presión adicional sobre la economía interna. Por ello, propuso un

Article 1438234578188

Deuda externa de México frena su crecimiento
#3-ene-2017 #el-financiero #noticias

Alzas en tasas de interés y dólar caro son factores que limitaron el endeudamiento en el tercer trimestre de 2016, conforme a cifras del Banco de México. El dinamismo mostrado por el comportamiento del endeudamiento externo de México perdió fuerza en 2016, lo cual puede ser una señal de un cambio de dirección en su explosivo crecimiento que había registrado desde el 2009 ante las inminentes alzas en las tasas de interés que alejará el dinero barato. El saldo de la deuda bruta ajustada de México ascendió a 419 mil 810 millones de dólares al cierre de septiembre del 2016, de acuerdo con la última información publicada por el Banco de México. Dicho monto representa una disminución de 12 mil 662 millones de dólares con respecto al saldo presentado al cierre de marzo del año pasado, cuando a ascendió a la cifra sin precedente de 432 mil 472 millones. Del primer trimestre del 2009 al mismo lapso del 2016, el saldo de la deuda externa bruta de México creció 157.20 por ciento, al pasar de 168 mil 145 a

#### Annotation 1438235888908

#3-ene-2017 #el-financiero #noticias
El saldo de la deuda bruta ajustada de México ascendió a 419 mil 810 millones de dólares al cierre de septiembre del 2016

Deuda externa de México frena su crecimiento
de México perdió fuerza en 2016, lo cual puede ser una señal de un cambio de dirección en su explosivo crecimiento que había registrado desde el 2009 ante las inminentes alzas en las tasas de interés que alejará el dinero barato. <span>El saldo de la deuda bruta ajustada de México ascendió a 419 mil 810 millones de dólares al cierre de septiembre del 2016, de acuerdo con la última información publicada por el Banco de México. Dicho monto representa una disminución de 12 mil 662 millones de dólares con respecto al saldo presentado al cier

#### Flashcard 1438236937484

Tags
#3-ene-2017 #el-financiero #noticias
Question
El saldo de la deuda bruta ajustada de México ascendió a [...] millones de dólares al cierre de septiembre del 2016
419 mil 810

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El saldo de la deuda bruta ajustada de México ascendió a 419 mil 810 millones de dólares al cierre de septiembre del 2016

#### Original toplevel document

Deuda externa de México frena su crecimiento
de México perdió fuerza en 2016, lo cual puede ser una señal de un cambio de dirección en su explosivo crecimiento que había registrado desde el 2009 ante las inminentes alzas en las tasas de interés que alejará el dinero barato. <span>El saldo de la deuda bruta ajustada de México ascendió a 419 mil 810 millones de dólares al cierre de septiembre del 2016, de acuerdo con la última información publicada por el Banco de México. Dicho monto representa una disminución de 12 mil 662 millones de dólares con respecto al saldo presentado al cier

#### Annotation 1438239034636

#3-ene-2017 #el-financiero #noticias
Los principales bancos centrales en el mundo están dejando de inyectar liquidez y algunos ya iniciaron las alzas en su tasa de referencia, como es el caso de la Reserva Federal de Estados Unidos.

Deuda externa de México frena su crecimiento
exterior fue posible debido a la fuerte liquidez y a las bajas tasas de interés que se presentaron después de la pasada crisis mundial, cuya parte más álgida se alcanzó a finales del 2008. Sin embargo, lo vientos están cambiando. <span>Los principales bancos centrales en el mundo están dejando de inyectar liquidez y algunos ya iniciaron las alzas en su tasa de referencia, como es el caso de la Reserva Federal de Estados Unidos. EL MENSAJE DE LAS CALIFICADORAS El freno al crecimiento de la deuda del exterior en México reportado a finales del 2016, resulta una buena señal dado que ha sido uno de

Article 1438241918220

Subject 2. Basic Principles of Capital Budgeting
#analyst-notes #cfa-level-1 #corporate-finance #has-images #reading-35-capital-budgeting #study-session-10

Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportun

#### Annotation 1438246636812

Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital.

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on t

#### Flashcard 1438247685388

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Question
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the [...].
opportunity cost of capital

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Open it
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are:

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on t

#### Annotation 1438251355404

Assumptions of capital budgeting are:

• Capital budgeting decisions must be based on cash flows, not accounting income.

Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant.

Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income.

• Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations.

• The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost.

• Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds.

• Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing.

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438252403980

Tags
Question
Assumptions of capital budgeting are (First 2):

• Capital budgeting decisions must be based on [...], not [...]

• Cash flow timing is critical.
cash flows

accounting income.

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#### Parent (intermediate) annotation

Open it
Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the tim

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

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Firms must have adequate cash flow to [...]

meet maturing obligations.

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are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because <span>money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438259481868

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Assumptions of capital budgeting are (middle one):
• The [...] should be [...] against a project
opportunity cost

charged

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ncing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. <span>The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured o

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438261841164

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Assumptions of capital budgeting are (last 2):

• Expected future cash flows must be measured [...]
• Ignore how the project [...]
on an after-tax basis.

is financed.

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The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured <span>on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since t

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Annotation 1438264200460

Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant.

Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income.

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Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. &#13

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438265773324

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Accounting profits only measure [...]

the return on the invested capital.

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Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are releva

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438268132620

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Accounting income calculations reflect [...] and ignore [...] .
non-cash items

the time value of money

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Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investme

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438270491916

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[...] income calculations reflect non-cash items and ignore the time value of money.
Accounting

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d>Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. &

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438272851212

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Economic income is an investment's [...] plus the [...].

after-tax cash flow

change in the market value

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ccounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's <span>after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. <span><body><html>

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438275210508

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[...] are ignored in computing economic income.

Financing costs

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ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. <span>Financing costs are ignored in computing economic income. <span><body><html>

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438277569804

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• Cash flow timing, besides TVM is critical because firms must [...]
have adequate cash flow to meet maturing obligations.

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stment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must <span>have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opport

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438280191244

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Question

The firm's wealth depends on its usable [...]

after-tax funds.

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ember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable <span>after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438282812684

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Question

• Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in [...].
the cost of capital used to discount the cash flows

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-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in <span>the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing.<span><body><html>

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Flashcard 1438285171980

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• The existence of a project depends on [...], not financing.

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how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on <span>business factors, not financing.<span><body><html>

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which

#### Annotation 1438287531276

#analyst-notes #cfa-level-1 #corporate-finance #has-images #reading-35-capital-budgeting #study-session-10
Important capital budgeting concepts:

• A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis.

For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent$5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the$5,000 is spent.

• Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project.

• Forget sunk costs.
• Subtract opportunity costs.
• Consider side effects on other parts of the firm: externalities and cannibalization.
• Recognize the investment and recovery of net working capital.

• Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. • Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: • Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. • Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. • Conventional versus non-conventional cash flows. • A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. • In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. status not read Subject 2. Basic Principles of Capital Budgeting d in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of$10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This$5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a$5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe

#### Flashcard 1438288579852

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Important capital budgeting concepts (first 2):

• Sunk costs.

• [...] cash​ [...]
Incremental cash flow

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#### Flashcard 1438290939148

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A [...] is a cash outlay that and which cannot be recovered regardless of whether a project is accepted or rejected
sunk cost

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Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting ana

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting

#### Flashcard 1438298803468

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• Incremental cash flow important things (first 2)

• Forget sunk costs.
• ​Substract [...]
Subtract opportunity costs.

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spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. <span>Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. O

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting

#### Flashcard 1438303784204

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Important capital budgeting concepts (middle one):
• [...]
Opportunity cost

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#13; Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. <span>Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the book

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting

#### Annotation 1438314269964

• Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline.

Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows.

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#### Flashcard 1438315318540

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Question
[...] are the effects of a project on cash flows in other parts of a firm.
Externalities

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Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative

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Subject 2. Basic Principles of Capital Budgeting

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Externalities can be either [...]
positive or negative:

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Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the books

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting

#### Flashcard 1438328687884

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Question

• Negative externalities create [...].
costs for other parts of the firm

If the bookstore is considering opening a branch nearby, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality.

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Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the ol

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting

#### Flashcard 1438333406476

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Question

The primary type of negative externality is [...], which occurs when [...]

cannibalization

the introduction of a new product causes sales of existing products to decline.

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ookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is <span>cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative external

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting

#### Flashcard 1438338125068

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Question

How should be negative externalities cash flows treated in the capital budget?

They should be subtracted since they are not incremental

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#13; Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be <span>subtracted from the new projects' cash flows.<span><body><html>

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting

#### Flashcard 1438342843660

Tags
#analyst-notes #cfa-level-1 #corporate-finance #has-images #reading-35-capital-budgeting #study-session-10
Question

In a non-conventional cash flow pattern, the initial outflow can be followed by [...]

inflows and/or outflows.

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A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by <span>inflows and/or outflows. <span><body><html>

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
d in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent$5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the$5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a \$5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe

#### Flashcard 1438348086540

Tags
#analyst-notes #cfa-level-1 #corporate-finance #has-images #reading-35-capital-budgeting #study-session-10
Question
What is this
A non-conventional cashflow

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#### Flashcard 1438352805132

Tags
#analyst-notes #cfa-level-1 #corporate-finance #has-images #reading-35-capital-budgeting #study-session-10
Question
What is this ?
conventional cashflow

status measured difficulty not learned 37% [default] 0

#### Annotation 1438354640140

Some project interactions:

• Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met.

• Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A?

• Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return.

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438355688716

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Question
Some project interactions:

• [...]
• Project sequencing.
• Unlimited funds versus capital rationing.
Independent versus mutually exclusive projects.

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Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand,

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Annotation 1438358048012

Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met.

#### Parent (intermediate) annotation

Open it
Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? &#13

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438359096588

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Question
Mutually exclusive projects are investments that [...]
compete in some way for a company's resources

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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438361455884

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Question
With Mutually exclusive projects a firm can select [...]
one or another but not both.

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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met.&#13

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438363815180

Tags
Question
[...] do not compete for the firm's resources.
Independent projects

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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met.

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438366174476

Tags
Question
A company can select one or the other or both Independent projects, so long as [...] are met.
minimum profitability thresholds

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ts that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as <span>minimum profitability thresholds are met. <span><body><html>

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Annotation 1438368533772

How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A?

#### Parent (intermediate) annotation

Open it
other but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. <span>How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Annotation 1438370106636

Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return.

#### Parent (intermediate) annotation

Open it
, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? <span>Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return.<span><body><html>

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438371155212

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Question
Capital rationing occurs when management [...] on the size of the firm's capital budget during a particular period.
places a constraint

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Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's agg

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438373514508

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Question
In Capital rationing , capital is scarce and should be allocated to the projects most likely to maximize the firm's [...].
aggregate NPV

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#### Parent (intermediate) annotation

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capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to <span>maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all prof

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438376135948

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Question
The firm's capital budget and [...] must be determined simultaneously to best allocate the firm's capital.

cost of capital

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hen management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's <span>capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by p

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438378495244

Tags
Question
A firm can raise the funds it wants for all profitable projects simply by [...].
paying the required rate of return

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ximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by <span>paying the required rate of return.<span><body><html>

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438397631756

Tags
#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10 #subject-2-basic-principles-of-capital-budgeting
Question

Learning Outcome Statements

b. [...]

c. explain how the evaluation and selection of capital projects is affected by mutually exclusive projects, project sequencing, and capital rationing;

describe the basic principles of capital budgeting;

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Subject 2. Basic Principles of Capital Budgeting
t allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. <span>describe the basic principles of capital budgeting; c. explain how the evaluation and selection of capital projects is affected by mutually exclusive projects, project sequencing, and capital rationing; &#13

#### Annotation 1438400253196

Project sequencing
Many projects are sequenced through time, so that investing in a project creates the option to invest in future projects. For example, you might invest in a project today and then in one year invest in a second project if the financial results of the first project or new economic conditions are favorable. If the results of the first project or new economic conditions are not favorable, you do not invest in the second project.

Subject 2. Basic Principles of Capital Budgeting
n select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. <span>Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rati

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Question
Many projects are [...], so that investing in a project creates the option to invest in future projects.
sequenced through time

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Many projects are sequenced through time, so that investing in a project creates the option to invest in future projects. For example, you might invest in a project today and then in one year invest in a second project if the

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
n select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. <span>Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rati

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#italian #italian-grammar
Question
Invariable nouns are nouns that have the same form for [...)
both singular and plural

un film, dei film ‘a film, some films’, or for both masculine and feminine, un artista, un’artista ‘an artist’.

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Invariable nouns are nouns that have the same form for both singular and plural, un film, dei film ‘a film, some films’, or for both masculine and feminine, un artista, un’artista ‘an artist’. An invariable adjective is one that does not change form to agree with t

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#italian #italian-grammar
Question
An invariable adjective is one that [...], whether masculine or feminine, singular or plural
does not change form to agree with the noun

un vestito rosa ‘a pink dress’, una giacca rosa ‘a pink jacket’; dei pantaloni rosa ‘some pink trousers’; delle calze rosa ‘some pink stockings’.

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y>Invariable nouns are nouns that have the same form for both singular and plural, un film, dei film ‘a film, some films’, or for both masculine and feminine, un artista, un’artista ‘an artist’. An invariable adjective is one that does not change form to agree with the noun, whether masculine or feminine, singular or plural: un vestito rosa ‘a pink dress’, una giacca rosa ‘a pink jacket’; dei pantaloni rosa ‘some pink trousers’; delle calze rosa ‘some pink

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Question
The purpose of the post-audit process is improving the accuracy of [...] by adopting improved forecasting methods.
capital budgeting forecasts

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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

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Question
The post-audit process is difficult because forecasts are always [...]
"wrong" to some degree

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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438433807628

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Question
The post-audit process is difficult because

forecasts may be "wrong" due to [...] no longer [...]

poor decisions made by executives or managers no longer employed by the company.

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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438436691212

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Question
The post-audit process is difficult because forecasts may seem "wrong" when viewed [...]

in isolation

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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat

#### Flashcard 1438441409804

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Question
An expansion project is a project where a firm invests in ______.

A. new assets to increase sales
B. developing new products to replace old products
C. research and development

Expansion projects deal with investment in new assets to increase firms' sales.

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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat