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:

Just Cause Discipline

A principle that requires employers to have a fair and valid reason for any disciplinary action, including termination, against employees.

Rights Disputes

Situations where there is a conflict or disagreement over legal entitlements or guaranteed protections, often within the context of employment or civil rights.

Outsourcing

The practice of having certain job functions performed outside of a company, typically by another company or individuals, to save costs or access specialized skills not available internally.

Successorship Clause

A provision in a labor contract ensuring that a new owner of a company recognizes and negotiates with the existing union representing the workers.