In 2008, Precision Pattern Interiors, Which Makes High-End Aircraft Interiors

question 235

Multiple Choice

In 2008, Precision Pattern Interiors, which makes high-end aircraft interiors, began a $1 million renovation of a building at the Hutchinson Air Base Industrial Tract south of Yoder, Kansas. The company will also add some $400,000 in new equipment and triple its Yoder work force. Which of Precision Pattern Interiors' decisions is a long run decision?

• A) $1 million renovation of a building at the Hutchinson Air Base Industrial Tract and $400,000 in new equipment purchases
• B) $1 million renovation of a building at the Hutchinson Air Base Industrial Tract
• C) $400,000 in new equipment purchases
• D) Triple its Yoder work force

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Definitions:

Present Value Factor

A factor used to calculate the present value of a cash flow to be received in the future.

Cash Payback Period

The period of time required for the return on an investment to "repay" the original capital cost of the investment.

Desired Rate

The desired rate often refers to the target interest rate set by central banks, or it could imply the expected return rate on investments by individuals or businesses.

Capital Investment Analysis

Evaluation processes used by businesses to assess the potential profitability and risk of investment opportunities.