If the Net Present Value of an Investment Is Positive

question 17

Multiple Choice

If the net present value of an investment is positive, this represents the:

• A) Net contribution margin of the investment
• B) Net profit of the investment
• C) Net tax benefit of the investment
• D) Net value gain of the investment above the hurdle rate

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Definitions:

Cost Behavior

Refers to the way different types of production costs change when there is a change in the level of production.

Special Order

A one-time order not considered part of the company's normal ongoing operations, often requiring special pricing and production considerations.

Variable Costs

Expenses that fluctuate directly with changes in production volume, such as raw materials and direct labor.

Capacity

The maximum level of output that a company can sustain to make a product or provide a service under normal conditions.