Managers Need All of the Following Information to Determine If

question 28

Multiple Choice

Managers need all of the following information to determine if the firm should make or buy an input except which one?

• A)the firm's discount rate
• B)the quantity of the input the firm needs each year
• C)the present value of the firm's current profit
• D)the salvage rate of the equipment to make the input

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Definitions:

Flat Fee

A pricing structure where a single fixed charge is applied for a service, irrespective of usage or time required.

Intangible Benefits

These are advantages that cannot be easily measured in monetary terms, such as brand reputation or employee morale.

Discount Rate

The rate used in discounted cash flow analysis to determine the present value of future cash flows, reflecting the opportunity cost of capital.

Salvage Value

The estimated residual value of an asset at the end of its useful life, important for calculating depreciation.