The Cakery Bakery Sells 200 Muffins at a Price of $2

question 157

Multiple Choice

The Cakery Bakery sells 200 muffins at a price of $2 per muffin. Its explicit costs for producing 200 muffins are $350. If the bakery is earning a normal rate of return, then its implicit costs must be

• A) $0.
• B) $50.
• C) $350.
• D) $400.

Calculate and interpret the payback period for capital investments.

Determine the net present value (NPV) of an investment and understand its implications for project selection.

Compute the internal rate of return (IRR) and understand its role in investment decisions.

Distinguish between cash flows and accounting profit in investment appraisal.

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Definitions:

Neuroticism

A personality trait involving a long-term tendency to be in a negative emotional state. People high in neuroticism are more likely to experience feelings of anxiety, sadness, and moodiness.

Agreeableness

A personality trait characterized by kindness, empathy, trustworthiness, and cooperation.

Extraversion

A personality trait characterized by outgoingness, sociability, and high energy levels, contrasting with introversion.

Personal Attributes Questionnaire

A self-report inventory that measures an individual's personality traits or characteristics.