You Are Using a Capital Budgeting Method to Assess the Worth

question 97

Multiple Choice

You are using a capital budgeting method to assess the worth of your company's new information system.Which of the following costs would you include in measuring the cash outflow?

• A)Increased sales of products
• B)Hardware and software expenditures
• C)Labor expenditures
• D)Reduced costs in production and operation
• E)Hardware,software,and labor expenditures

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use, and use by one person does not reduce availability to others.

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be either positive or negative.

Social Costs

The total cost of an action or decision, including both private costs and any externalities borne by society at large.

Positive Externality

Positive Externality occurs when a transaction or activity benefits a third party not directly involved, like the societal benefit of education or vaccinations.