Which of the Following Is Not a Rationale for Using

question 103

Multiple Choice

Which of the following is not a rationale for using the NPV method in capital budgeting?

• A) An NPV of zero signifies that the project's cash flows are just sufficient to repay the invested capital and to provide the required rate of return on that capital.
• B) A project whose NPV is positive will increase the value of the firm if that project is accepted.
• C) A project is considered acceptable if it has a positive NPV.
• D) A project is not considered acceptable if it has a negative NPV.
• E) All of the above are true.

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected amount, which can impact the cost of goods sold.

Material J

Material J refers to a specific category or type of raw material or input identified with the letter "J" used in manufacturing or production processes.

Direct Materials Quantity Variance

The difference between the budgeted amount of materials needed for production and the actual amount used, valuated at the standard cost.

Labor Rate Variance

The difference between the actual labor costs incurred and the expected or standard labor costs for the production volume achieved.