Regarding the Net Present Value of a Replacement Decision,which of the Following

question 141

Multiple Choice

Regarding the net present value of a replacement decision,which of the following statements is false?

• A) The present value of the after-tax cost reduction benefits resulting from the new investment is treated as an inflow.
• B) The after-tax market value of the old equipment is treated as an inflow at t = 0 (initial investment outlay).
• C) The present value of depreciation expenses on the new equipment,multiplied by the tax rate,is treated as an inflow.
• D) Any loss on the sale of the old equipment is multiplied by the tax rate and is treated as an outflow at t = 0 (initial investment outlay).
• E) An increase in net working capital is treated as an outflow when the project begins (initial investment outlay)and as an inflow when the project ends (terminal cash flow).

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Definitions:

DSM-IV

The fourth edition of the Diagnostic and Statistical Manual of Mental Disorders, a handbook used by healthcare professionals as a guide to diagnose mental disorders.

DSM-5

The fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, a standard classification of mental disorders used by mental health professionals in the U.S.

Up-To-Date Terminology

Refers to the use of modern, current language or phrases that accurately reflect the latest developments in a particular field or area of study.

Delusions

False beliefs held with strong conviction despite superior evidence to the contrary, often occurring as a symptom of psychiatric disorders.