Which of the Following Questions Would Contingency Planning Be Most

question 46

Multiple Choice

Which of the following questions would contingency planning be most likely to address?

• A) What is the best source of funds for our new production facility?
• B) How should we respond if the government hits our company with some tough new environmental regulations?
• C) What is the best promotional mix for the new products we will be introducing next year?
• D) When should we break ground on the new warehouse?

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Definitions:

Stand-Alone Principle

Evaluation of a project based on the project’s incremental cash flows.

Equivalent Annual Cost

A financial analysis tool used to compare the cost effectiveness of different assets by breaking down their costs into equivalent annual amounts.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time for an investment.

Internal Rate of Return

Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of potential investments, representing the discount rate at which the net present value of costs (cash outflows) and benefits (cash inflows) of an investment equal zero.