FIN 300 Final Exam (Latest Update 2026 /
2027) Questions and Verified Answers
{Grade A} 100 % Correct - BYU
A synonym for pretax operating cash flow is EBIT - correct answer False
EBITDA is more sensitive to changes in revenue than EBIT - correct answer False
Depreciation and amortization can be considered a fixed cost of the firm, for
accounting break-even purposes - correct answer True
Operating leverage is a measure of the sensitivity of net income to changes in
revenue - correct answer False
When two projects are mutually exclusive, accepting one project implicitly eliminates
the other. - correct answer True
Projects that are classified as contingent could be mandatory or optional projects -
correct answer True
Capital rationing refers to the limiting of capital resources to underperforming
divisions - correct answer False
In computing the NPV of a capital budgeting project, one should NOT
A) Make a decision based on the project's NPV
B) Ignore the salvage value
, FIN 300 Final Exam (Latest Update 2026 /
2027) Questions and Verified Answers
{Grade A} 100 % Correct - BYU
C) Estimate the cost of the project
D) Discount the future cash flows over the project's expected life - correct answer
ignore the salvage value
Which of the following is true about the Net Present Value Method:
A) The NPV assumes that all cash flows are reinvested at the firm's discount rate
B) The NPV allows projects to be ranked by rate of return
C) The NPV does not utilize time value of money
D) The NPV is a rate of return that is acceptable to the firm - correct answer A) The
NPV assumes that all cash flows are reinvested at the firm's discount rate
Capital budgeting is the process of:
A) Determining how much capital a firm should raise
B) Determining how much debt a firm should budget for in its capital structure
C) Determining which capital investments a firm should make
D) Keeping track of all the revenues and expenses incurred by a firm during the year -
correct answer C) Determining which capital investments a firm should make
Which of the following is true of capital budgeting decisions:
A) They create value for a firm when the value of the selected productive assets is
worth more than their costs
B) They can involve substantial cash outlays, which once made are not easily reversed
C) They define a firm's lines of business and its inherent business risk
, FIN 300 Final Exam (Latest Update 2026 /
2027) Questions and Verified Answers
{Grade A} 100 % Correct - BYU
D) All of these - correct answer D) All of these
The capital budgeting process starts with a firm's
A) Financial plan
B) Sales forecast
C) Business plan
D) Strategic plan - correct answer D) Strategic plan (Which spells out its strategy for
the next three to five years)
The valuation of real assets is less straightforward than the valuation of financial
assets - correct answer True
The net present value of a project equals the value of the assets used in the project -
correct answer False (The net present value of a project equals the difference
between the present value of its cost and the present value of its expected cash
flows.)
Which of the following represents an example of key reasons for making capital
expenditures?
A) Replacing production equipment
B) Floating a corporate bond issue
C) Replacing a key executive of a firm
2027) Questions and Verified Answers
{Grade A} 100 % Correct - BYU
A synonym for pretax operating cash flow is EBIT - correct answer False
EBITDA is more sensitive to changes in revenue than EBIT - correct answer False
Depreciation and amortization can be considered a fixed cost of the firm, for
accounting break-even purposes - correct answer True
Operating leverage is a measure of the sensitivity of net income to changes in
revenue - correct answer False
When two projects are mutually exclusive, accepting one project implicitly eliminates
the other. - correct answer True
Projects that are classified as contingent could be mandatory or optional projects -
correct answer True
Capital rationing refers to the limiting of capital resources to underperforming
divisions - correct answer False
In computing the NPV of a capital budgeting project, one should NOT
A) Make a decision based on the project's NPV
B) Ignore the salvage value
, FIN 300 Final Exam (Latest Update 2026 /
2027) Questions and Verified Answers
{Grade A} 100 % Correct - BYU
C) Estimate the cost of the project
D) Discount the future cash flows over the project's expected life - correct answer
ignore the salvage value
Which of the following is true about the Net Present Value Method:
A) The NPV assumes that all cash flows are reinvested at the firm's discount rate
B) The NPV allows projects to be ranked by rate of return
C) The NPV does not utilize time value of money
D) The NPV is a rate of return that is acceptable to the firm - correct answer A) The
NPV assumes that all cash flows are reinvested at the firm's discount rate
Capital budgeting is the process of:
A) Determining how much capital a firm should raise
B) Determining how much debt a firm should budget for in its capital structure
C) Determining which capital investments a firm should make
D) Keeping track of all the revenues and expenses incurred by a firm during the year -
correct answer C) Determining which capital investments a firm should make
Which of the following is true of capital budgeting decisions:
A) They create value for a firm when the value of the selected productive assets is
worth more than their costs
B) They can involve substantial cash outlays, which once made are not easily reversed
C) They define a firm's lines of business and its inherent business risk
, FIN 300 Final Exam (Latest Update 2026 /
2027) Questions and Verified Answers
{Grade A} 100 % Correct - BYU
D) All of these - correct answer D) All of these
The capital budgeting process starts with a firm's
A) Financial plan
B) Sales forecast
C) Business plan
D) Strategic plan - correct answer D) Strategic plan (Which spells out its strategy for
the next three to five years)
The valuation of real assets is less straightforward than the valuation of financial
assets - correct answer True
The net present value of a project equals the value of the assets used in the project -
correct answer False (The net present value of a project equals the difference
between the present value of its cost and the present value of its expected cash
flows.)
Which of the following represents an example of key reasons for making capital
expenditures?
A) Replacing production equipment
B) Floating a corporate bond issue
C) Replacing a key executive of a firm
