Your Company Is Considering Two Different Methods of Producing Its

question 12

Multiple Choice

Your company is considering two different methods of producing its product: purchase production equipment, or contract with a supplier to build the product for them. The methods have differing
Lives and cash flow streams. You should:

• A) Choose the method that will least affect the statement of financial position of the company.
• B) Choose the method that maximizes future cash inflows.
• C) Choose the method that will result in the highest net income.
• D) Choose the method that minimizes initial cash outflows.
• E) Choose the method that maximizes firm value.

---

Definitions:

Voluntary Action

An action that is performed with conscious control, as opposed to reflexive or automatic actions.

Involuntary Action

Reflex actions or movements that occur without conscious control.

Muscle Spasm

An involuntary contraction of a muscle or group of muscles, often causing pain.

Back

The posterior part of the human body, extending from the neck to the lower spine.