You Are Probably Looking at a Bill for a Variable

question 43

Multiple Choice

You are probably looking at a bill for a variable cost when you are paying for:

• A)Leased capital equipment.
• B)Salaries.
• C)Materials.
• D)Health insurance.

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Definitions:

Net Present Value

Net present value (NPV) is a financial calculation used to assess the profitability of an investment or project, by discounting all expected future cash flows to their present value using a specific discount rate.

Payback Period

The time it takes for an investment to generate enough cash flow to recover its initial cost, used in capital budgeting to evaluate investment efficiency.

Straight-Line Depreciation

A plan for breaking down the expense of a real asset across its viable life in steady annual segments.

Salvage Value

The anticipated earnings from an asset's sale following the cessation of its useful life.