Exhibit 9-4: Following Is a List of Testing Practices

question 46

Multiple Choice

Exhibit 9-4: Following is a list of testing practices.Assuming other things are equal, indicate whether the practice would lower reliability, raise reliability, or neither.
-Refer to Exhibit 9-4.Adding 10 items to the test that everyone answers correctly.

• A) lower reliability
• B) raise reliability
• C) neither raise nor lower reliability

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Definitions:

Straight-Line Method

A depreciation method that allocates an equal amount of depreciation expense for an asset over its useful life.

Discount Rate

The interest rate used to discount future cash flows to present value, often in investment and finance calculations.

Net Present Value

A calculation that compares the present value of cash inflows to the present value of cash outflows over a period of time to evaluate an investment.

Depreciable Equipment

Tangible assets used in business operations whose cost is allocated over its useful life due to wear and tear, obsolescence, or decay.