Using a Discount Rate of 12%, a Company Determined the NPV

question 28

Multiple Choice

Using a discount rate of 12%, a company determined the NPV of a project to be $12,300. If the NPV was recomputed using a 10% discount rate, the new NPV will be

• A) Higher
• B) Lower
• C) The same ($12,300)
• D) Cannot be determined

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Definitions:

Inventory Records

Documentation and tracking of a company's stock of goods or materials, essential for managing inventory levels and financial reporting.

Base Period

A specific time period used as a comparison point for assessing economic or financial data across different periods of time.

Variable Costing

An accounting method that only includes variable costs, such as materials and labor, in the cost of goods sold and excludes fixed overhead costs.

Direct Costing

A method in managerial accounting that includes variable costs directly attributable to the production of a product in the cost of goods sold, excluding fixed costs.