Table 2-7 Table 2-7 Shows the Output Per Month of Two People

question 35

Multiple Choice

Table 2-7

Table 2-7 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2-7.What is Fred's opportunity cost of making a pogo stick?

• A)1/3 of a unicycle
• B)3 unicycles
• C)6/7 of a pogo stick
• D)1/2 of a unicycle

Ability to rank projects based on profitability index and understanding its implications.

Understand the relationship between a project's payback period and its NPV.

Calculate the NPV for various projects given cash flows and discount rates.

Decide between mutually exclusive projects using NPV, IRR, and EAA methods.

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Definitions:

Range of Outcomes

The spectrum of possible results or returns for a particular investment or decision under various scenarios.

Project Outcomes

The results or achievements following the completion of a project, measuring its success or failure.

Variable Cost

Variable Cost refers to costs that change in proportion to the level of goods or services that a business produces.

Sales Commissions

Sales commissions are payments made to salespersons for selling products or services, typically a percentage of the sale price.