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A Manager Is Considering Whether to Purchase a New Company

question 49

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A manager is considering whether to purchase a new company vehicle that costs $50 000.She identifies two uncertain variables: net cash flows and the life of the vehicle.Assuming that the required rate of return is 10% p.a. ,evaluate which of the two variables is less sensitive to changes or errors using the following information: A manager is considering whether to purchase a new company vehicle that costs $50 000.She identifies two uncertain variables: net cash flows and the life of the vehicle.Assuming that the required rate of return is 10% p.a. ,evaluate which of the two variables is less sensitive to changes or errors using the following information:   A) Net cash flows. B) Life of vehicle. C) Both are equally sensitive. D) Not enough information.


Definitions:

Appreciate Value

The process by which an asset increases in value over time, often due to factors like inflation, demand, and improvements.

Sales Approach

A strategy or method employed by a salesperson or company to engage potential customers and facilitate transactions.

Presentation

A detailed introduction or demonstration of a product or service designed to inform and persuade potential buyers.

Corporate Products

Goods or services that are produced and marketed by a corporation, typically aimed at a business-to-business (B2B) market.

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