In the EOQ Model, If Carrying Costs Increase While All

question 126

Multiple Choice

In the EOQ model, if carrying costs increase while all other costs remain unchanged, the number oforders placed would be expected to

• A) remain unchanged.
• B) increase.
• C) change without regard to carrying costs.
• D) decrease.

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Definitions:

IRR

The interest rate at which the total present value of a project or investment's incoming and outgoing cash flows sum to zero.

WACC

A technique called Weighted Average Cost of Capital computes a firm’s cost of funds, taking into account the proportional weighting of various capital types.

NPV

Net Present Value represents a technique for assessing the profitability of a project or investment, utilized in the process of capital budgeting.

Cash Flow

The total amount of money being transferred into and out of a business, capturing the company's operational, investing, and financing activities.