Which of the Following Makes Using Present Value Approaches in Capacity

question 44

Multiple Choice

Which of the following makes using present value approaches in capacity decisions difficult?

• A)The discount rate must be adjusted to account for inflation.
• B)Some cash flows are positive and other cash flows are negative.
• C)The payback period might not be long enough to justify a capacity decision.
• D)Capacity decisions are made amidst much uncertainty, so cash flows cannot be estimated with great accuracy.
• E)There is a cash outflow at the outset followed by, possibly, net cash inflows.

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Definitions:

Conspicuous Consumption

The purchase and prominent display of luxury goods to provide evidence of a consumer’s ability to afford them.

Taste Test

An evaluation process where individuals sample and rate different foods or beverages based on flavor, texture, and other sensory attributes.

Crowding

A subjective feeling of having less space than desired, often due to a high density of people or objects.

Ethnographic

A research method that attempts to provide a close understanding of people and cultures.