It Was Fortunate That the Project Budget Included Contingency Funding;the

question 20

Multiple Choice

It was fortunate that the project budget included contingency funding;the top manager had not foreseen that the project would need the services of their elite slide rule squad in more than one area at the same time.Design couldn't complete their work without their services,nor could marketing,or production.Contingency funds came in handy to meet the unanticipated:

• A)Change in project scope.
• B)Abnormal project conditions.
• C)Consequences of Murphy's Law.
• D)Interaction costs.

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Definitions:

After-Tax Cost of Debt

The net cost of debt to a company after accounting for the tax deductions on interest payments, effectively lowering the interest expense.

Bond Prices

The market value of a bond, which can fluctuate based on interest rates, credit quality of the issuer, and other factors.

Security Market Line

A representation in the Capital Asset Pricing Model (CAPM) showing the relationship between the expected return of a security and its risk, measured by beta.

Marginal Tax Rate

The rate at which the next dollar of taxable income would be taxed, reflecting the percentage taken by taxes in the next higher tax bracket.