A Policy Is Approved That Requires a Company near a Large

question 22

Multiple Choice

A policy is approved that requires a company near a large city to keep its smokestack pollution to new lower levels,costing the company $2 million in additional equipment which will last at least 10 years) and $100,000 a year in additional labor.Lowering the air pollutants in the region is expected to save $4 million in medical expenses in the region over the next 10 years.Which of the following can be inferred from this information?

• A)The company appears to lose money because of the policy,but it may decide to pass the costs along to consumers.
• B)The company will save approximately $1 million over the next 10 years by implementing the new equipment.
• C)The cost of the new equipment outweighs the benefit of its implementation.
• D)Taxpayers will save approximately $1 million if the company implements the new equipment.

---

Definitions:

Operating Capability

The ability of a company to maintain efficient operations and produce goods or services at a consistent level of quality.

Physical Capacity

A measure of the maximum amount of work or production an asset can achieve in a certain period under normal conditions.

Working Capital

The difference between a company's current assets and current liabilities, representing the short-term liquidity.