Should a Project Be Accepted If It Offers an Annual

question 99

Multiple Choice

Should a project be accepted if it offers an annual after-tax cash flow of $1,250,000 indefinitely,costs $10 million,is riskier than the firm's average projects,and the firm uses a 12.5% WACC?

• A) Yes, since NPV is positive.
• B) Yes, since a zero NPV indicates marginal acceptability.
• C) No, since NPV is zero.
• D) No, since NPV is negative.

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Definitions:

Customer Cost Analysis

An evaluation process that examines the costs associated with serving a customer or client group, including acquisition, service, and support expenses.

Customer Service Department

A division within a company focused on providing assistance, support, and information to the customers to ensure satisfaction with products or services.

Capacity Analysis

The study and evaluation of the production capabilities of a manufacturing facility to understand its maximum output over a period.

Time-Driven Activity-Based Costing

An approach to activity-based costing that uses simple cost drivers like the amount of time required to complete an activity, improving the costing process's simplicity and accuracy.