When Managers Cannot Determine Whether to Invest Now or Wait

question 104

Multiple Choice

When managers cannot determine whether to invest now or wait until costs decrease later,the rule should be to:

• A) postpone until costs reach their lowest.
• B) invest now to maximize the NPV.
• C) postpone until the opportunity cost reaches its lowest.
• D)invest at the date that gives the highest NPV today.

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Definitions:

Trend Analysis

Constructing and applying statistical models that predict labor demand for the next year, given relatively objective statistics from the previous year.

Transitional Matrix

A mathematical matrix concerned with the probabilities of switching from one state to another in various processes or systems.

Human Resource Planning

The strategic process organizations use to forecast their future human resource needs and develop plans to ensure the right number and kind of people are available when needed.

Labor Surplus

A situation where the supply of labor exceeds the demand, often leading to unemployment or lower wages.