A Higher Interest Rate (R)will Favor Those Projects in Cost-Benefit

question 25

Multiple Choice

A higher interest rate (r) will favor those projects in cost-benefit analysis which

• A) have costs and benefits occurring in the more distant future.
• B) have costs and benefits occurring in the more immediate future.
• C) have benefits occurring in the more immediate future and costs occurring in the more distant future.
• D) have benefits occurring in the more distant future and costs occurring in the more immediate future.

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Definitions:

Machine-hours

The total operational time of machines within a production process, utilized for cost allocation and efficiency analysis.

Maintenance Department

The division within an organization responsible for the upkeep, repair, and servicing of equipment and facilities.

Fixed Costs

Outgoings that remain invariable, regardless of operational output or sales numbers, encompassing costs like rent, employee pay, and safeguarding premiums.

Long-run Average Demand

is the average demand forecasted over a longer period, helping in strategic planning and capacity decisions.