Question

Capital budgeting models have Large cash outflow followed by a series of cash inflows and a series of decommissioning cash outflows.

a. True
b. False

Answer 1

False, Capital budgeting models typically involve a large initial cash outflow for asset acquisition followed by cash inflows, not a series of decommissioning cash outflows.

Step-by-step explanation:

The statement that capital budgeting models have a large cash outflow followed by a series of cash inflows and a series of decommissioning cash outflows is false. Typically, capital budgeting involves an initial large cash outflow to acquire a long-term asset, which is then expected to generate a series of cash inflows over its useful life. The concept of a series of decommissioning cash outflows at the end is not a typical feature of standard capital budgeting models; although there can be some decommissioning costs, they are not usually characterized as a series of outflows.