1|Page
BUSFIN Final Conceptual Exam | Most Recent Exam
2026 Actual Complete Real Exam Questions And
Correct Answers||Verified Exam!!! (Verified Answers)
Already Graded A+ |Guaranteed Success!! Newest
Exam!!!
McDonald's is planning to open a new store across from
the student union. Annual revenues are expected to be $5
million. However, opening the new location will cause
annual revenues to drop by $3 million at McDonald's
existing stadium location. The relevant sales revenues for
the capital budgeting analysis are $2 million per year.
A) True
B) False - Answers-True
Global Spice Co. is considering a new project, but all
methods for assessing risk indicate that the project's risk is
greater than the risk of the firm's average project. In
evaluating this project, it would be reasonable for Global
Spice's management to do which of the following?
A) Increase the cost of capital used to evaluate the project
to reflect its higher-than-average risk.
,2|Page
B) Increase the estimated IRR of the project to reflect its
greater risk.
C) Increase the estimated NPV of the project to reflect its
greater risk.
D) Reject the project, as its acceptance would increase
the firm's risk.
E) Ignore the risk differential if the project would amount to
only a small fraction of the firm's total assets. - Answers-
Increase the cost of capital used to evaluate the project to
reflect its higher-than-average risk.
In capital budgeting decisions, corporate risk will be of
least interest to _____.
A) employees
B) stockholders with few shares
C) institutional investors
D) creditors
E) the local community - Answers-Institutional investors
When conducting a replacement analysis, the incremental
cash flows _____.
, 3|Page
A) are derived by subtracting the cash flows for the old
project from the cash flows for the new project
B) are derived by subtracting the cash flows for the new
project from the cash flows for the old project
C) are derived by adding the cash flows for the new
project to the cash flows for the old project
D) should not be considered; cash flow differentials
between the old and new projects should be used instead
E) should be considered if and only if the IRR is greater
than the NPV - Answers-Are derived by subtracting the
cash flows for the old project from the cash flows for the
new project
While reviewing a replacement analysis, a CEO discovers
that the yearly depreciation on the old project was
incorrectly listed as $50 rather than $100. Correcting the
error will have which of the following effects?
a. The outcome of the replacement analysis will not
change.
b. The replacement will look more attractive because the
differentials between the old and new cash flows will
increase.
BUSFIN Final Conceptual Exam | Most Recent Exam
2026 Actual Complete Real Exam Questions And
Correct Answers||Verified Exam!!! (Verified Answers)
Already Graded A+ |Guaranteed Success!! Newest
Exam!!!
McDonald's is planning to open a new store across from
the student union. Annual revenues are expected to be $5
million. However, opening the new location will cause
annual revenues to drop by $3 million at McDonald's
existing stadium location. The relevant sales revenues for
the capital budgeting analysis are $2 million per year.
A) True
B) False - Answers-True
Global Spice Co. is considering a new project, but all
methods for assessing risk indicate that the project's risk is
greater than the risk of the firm's average project. In
evaluating this project, it would be reasonable for Global
Spice's management to do which of the following?
A) Increase the cost of capital used to evaluate the project
to reflect its higher-than-average risk.
,2|Page
B) Increase the estimated IRR of the project to reflect its
greater risk.
C) Increase the estimated NPV of the project to reflect its
greater risk.
D) Reject the project, as its acceptance would increase
the firm's risk.
E) Ignore the risk differential if the project would amount to
only a small fraction of the firm's total assets. - Answers-
Increase the cost of capital used to evaluate the project to
reflect its higher-than-average risk.
In capital budgeting decisions, corporate risk will be of
least interest to _____.
A) employees
B) stockholders with few shares
C) institutional investors
D) creditors
E) the local community - Answers-Institutional investors
When conducting a replacement analysis, the incremental
cash flows _____.
, 3|Page
A) are derived by subtracting the cash flows for the old
project from the cash flows for the new project
B) are derived by subtracting the cash flows for the new
project from the cash flows for the old project
C) are derived by adding the cash flows for the new
project to the cash flows for the old project
D) should not be considered; cash flow differentials
between the old and new projects should be used instead
E) should be considered if and only if the IRR is greater
than the NPV - Answers-Are derived by subtracting the
cash flows for the old project from the cash flows for the
new project
While reviewing a replacement analysis, a CEO discovers
that the yearly depreciation on the old project was
incorrectly listed as $50 rather than $100. Correcting the
error will have which of the following effects?
a. The outcome of the replacement analysis will not
change.
b. The replacement will look more attractive because the
differentials between the old and new cash flows will
increase.
