Hale Plumbing Used the Net Present Value Method and Determined

question 201

Multiple Choice

Hale Plumbing used the net present value method and determined that project 34 had a zero net present value. What does this tell management about the project?

• A) The return from this project is equal to the cost of capital.
• B) The project guarantees company profitability.
• C) The project's cash inflows will equal its cash outflows.
• D) The project earns the company's desired minimum rate of return.

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Definitions:

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, demonstrating how fixed costs per unit change with production volume.

Economic Profit

The distinction in financial terms between total income and the entirety of costs, both direct and hidden.

Identical Firms

Companies that offer the same products or services and operate in the same market with similar strategies and resources.

Cost Data

Information regarding the expenses incurred in the production, operation, or acquisition of goods and services.