Regarding the Net Present Value of a Replacement Decision, Which

question 29

Multiple Choice

Regarding the net present value of a replacement decision, which of the following statements is false?

• A) The present value of the after tax cost reduction benefits resulting from the new investment is treated as an inflow.
• B) The after-tax market value of the old equipment is treated as an inflow at t = 0.
• C) The present value of depreciation expenses on the new equipment, multiplied by the tax rate, is treated as an inflow.
• D) Any loss on the sale of the old equipment is multiplied by the tax rate and is treated as an outflow at t = 0.
• E) An increase in net operating working capital is treated as an outflow when the project begins and as an inflow when the project ends.

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Definitions:

Ego

In psychoanalytic theory, it represents the part of the psyche that mediates between the desires of the id, the values of the superego, and the external world.

Personal Unconscious

A term by Carl Jung referring to a layer of the unconscious mind that contains forgotten experiences and repressed memories unique to the individual.

Collective Unconscious

A term coined by Carl Jung, it refers to the part of the unconscious mind that is derived from ancestral memory and experience and is common to all humankind.

Introversion

A personality trait characterized by a focus on internal feelings rather than external sources of stimulation, often involving a preference for solitary activities.