Assume Your Firm Has an Unused Machine That Originally Cost

question 69

Multiple Choice

Assume your firm has an unused machine that originally cost $75,000,has a book value of $20,000,and is currently worth $25,000.Ignoring taxes,the correct opportunity cost for this machine in capital budgeting decisions is:

• A) $75,000
• B) $25,000
• C) $20,000
• D) $5,000

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Definitions:

JIT Systems

Just-In-Time inventory management systems designed to increase efficiency and decrease waste by receiving goods only as they are needed in the production process.

Variability

The extent to which data points in a statistical distribution or set differ from each other and from their average.

Engineering Drawings

Technical drawings and specifications for the design, construction, and operation of objects or systems.