GB 519 RANK Career Path Begins/gb519rank.com GB 519 RANK Career Path Begins/gb519rank.com | Page 43

Capital budgeting is the process of identifying, evaluating,
selecting, and controlling long-term investment projects.
Capital budgeting is based on precise estimates of future
events.
Capital budgeting involves estimating the revenues and costs
of each proposed project, evaluating their merits, and choosing
those worthy of investment.
UNIT 4 QUIZ
Question 9. Question : The after-tax cost of debt for purposes of
estimating a company's
weighted-average cost of capital:
Student Answer:
Requires an estimate of the yield-to-maturity for long-term
bonds.
Is equal to the pretax cost of debt times t, where t = income
tax rate.
Is equal to the pretax cost of debt ÷ (1 - t), where t = income
tax rate.
Is approximated by the firm's short-term borrowing rate.