What Happens to the NPV of a One-Year Project If

question 122

Multiple Choice

What happens to the NPV of a one-year project if fixed costs are increased from $400 to $600, the firm is not profitable, has a 15% tax rate and employs a 12% cost of capital?

• A)NPV decreases by $200.00
• B)NPV decreases by $178.57
• C)NPV decreases by $130.00
• D)NPV decreases by $113.04 Increase fixed costs by $200
• Present value of $200 at 12% for 1 year = $178.57.

Understand the conceptual differences between disorders with similar symptoms.

Identify the differences between perfectly inelastic and perfectly elastic demand curves.

Calculate the price elasticity of demand using given data.

Determine the relationship between elasticity and total revenue.

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Definitions:

Custodial Department

A division within an organization responsible for maintenance, cleaning, and security services.

Step-down Method

A cost allocation method used in accounting where overhead costs are assigned to departments in a sequential order, often starting with the department that incurs the most overhead, then allocating costs down to other departments based on predetermined criteria.

Personnel Department

A division within an organization responsible for managing human resources and employee-related issues.

Job-Order Costing

An accounting method that tracks production costs to specific jobs or orders, allowing for detailed cost analysis of each job.