APV = NPV (Without Expansion Option) + Value of the Expansion

question 40

True/False

APV = NPV (without expansion option) + Value of the expansion option.

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Definitions:

Unit Variable

A measurement that reflects how variable costs change per unit of production or activity level.

Unit Fixed

This specifies a cost or charge that remains constant per unit regardless of changes in the level of activity or volume of production.

Costs

Costs refer to the expenditures incurred by a business in the process of generating revenues.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.