Which of the Following Statements Is True Regarding a Replacement

question 6

Multiple Choice

Which of the following statements is true regarding a replacement decision?

• A) The benefits resulting from the new investment is treated as an inflow.
• B) The net cash flow from the sale of an old equipment is treated as an outflow at t = 0 (initial investment outlay).
• C) The depreciation expenses on the new equipment is treated as an outflow.
• D) Any loss on the sale of the old equipment is multiplied by the tax rate and is treated as an outflow at t = 0 (initial investment outlay).
• E) An increase in the net working capital is treated as an inflow when the project begins (initial investment outlay) and as an outflow when the project ends (terminal cash flow).

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Definitions:

Oldowan

Refers to the archaeological evidence pertaining to the use of very simple chipped stone tools by early human ancestors in the Lower Paleolithic period.

Modern Human Origins

The study of the evolutionary processes and ancestral lines that led to the emergence of Homo sapiens as a distinct species.

Miocene

An epoch of the Neogene Period in the geological timescale, occurring about 23 to 5.3 million years ago, characterized by the development of grasslands and the evolution of many modern species.

Hominoids

A taxonomic group that includes all modern and extinct apes and humans, characterized by a more complex brain and greater flexibility in behaviors than other primates.