What Are Demand Characteristics? Explain the Circumstances Under Which Demand

question 20

Essay

What are demand characteristics? Explain the circumstances under which demand characteristics operate as nuisance variables. Explain the circumstances under which demand characteristics operate as extraneous variables.

Understand the effect of tax implications on cash flows from capital investments.

Understand the concepts of payback method and time value of money in capital budgeting decisions.

Identify the role of preference decisions in the context of capital budgeting.

Comprehend that shorter payback periods do not necessarily indicate higher profitability.

---

Definitions:

Declining-Balance Method

A method of accelerated depreciation where an asset loses value at a faster rate in its early years of use.

Revenue Expenditures

Expenditures that are immediately charged against revenues as an expense.

Ordinary Repairs

Expenditures to maintain the operating efficiency and productive life of the unit.

Capital Expenditures

Capital employed by a business to buy or enhance tangible assets like land, factories, or machinery to boost long-term business activities.