A Capacity Alternative Has an Initial Cost of $50,000 and Cash

question 90

Multiple Choice

A capacity alternative has an initial cost of $50,000 and cash flow of $20,000 for each of the next four years. If the cost of capital is 5 percent, the net present value of this investment is

• A) greater than $80,000
• B) greater than $130,000
• C) less than $30,000
• D) Impossible to calculate, because no interest rate is given.
• E) Impossible to calculate, because variable costs are not known.

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Definitions:

Independent Variable

The variable in an experiment that is manipulated or changed to observe its effect on the dependent variable.

Placebo Treatment Group

A group of participants in a research study who receive a sham or inert treatment, allowing researchers to measure the placebo effect.

Placebo Control Group

A group in experimental research receiving a placebo or sham intervention, used to compare against the group receiving the actual intervention to measure its effect.

Manipulation Checks

Procedures used in experimental research to verify that the manipulations of independent variables have the intended effect on participants.