Analysts at Tabby Fur Storage Predict That the Net Present

question 69

Multiple Choice

Analysts at Tabby Fur Storage predict that the net present value of a proposed new $10 million warehouse is $1 million.How should these findings be interpreted?

• A) Although NPV is positive, its value is too low for such a large expenditure and as a result, the project should be rejected.
• B) The project should be rejected because the NPV is less than the cost of the warehouse.
• C) The project should be accepted because it will add value to the firm.
• D) More information such as the payback period should be evaluated since the reliance on only one capital budgeting technique should be discouraged.
• E) The project does not meet the acceptance criteria of the NPV method and should be rejected.

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Definitions:

Workplace Equipment

Tools, machinery, and other physical devices or items used by employees to perform tasks and functions in the workplace.

Continuous Improvement

Continuous improvement is an ongoing effort to enhance products, services, or processes through incremental improvements over time or through breakthrough innovations.

Work Process

A series of actions or steps taken in order to achieve a particular end in a business or professional environment.

Value Process Re-Engineering

The analysis and redesign of workflows and processes within an organization to optimize output and improve quality.