ACCA MA · Chapter 11 · Question 1 of 10
Which of the following is capital expenditure?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Purchase of a new delivery vehicle
Explanation
Capital expenditure buys or improves non-current assets that will be used over several periods. Buying a vehicle is capital expenditure. Repairs, fuel and insurance keep existing assets running and are revenue expenditure.
More Capital budgeting MCQs
- Q3$5,000 is invested at 6% per year, compounded annually. What will the investment be worth at the end of 4 years (to the nearest $)?
- Q4A loan charges interest of 1.5% per month, compounded monthly. What is the equivalent annual interest rate (to two decimal places)?
- Q5A project costs $100,000 now and will generate cash inflows of $35,000 a year for 4 years, starting one year from now. The cost of capital…
- Q6A project has an NPV of $10,950 at a discount rate of 10% and an NPV of $(5,850) at 18%. Using linear interpolation, what is the estimated…
- Q7An investment will pay $12,000 a year in perpetuity, with the first receipt in one year's time. The discount rate is 8%. What is the…