If a Project Has a Cost of $50,000 and a Profitability

question 75

Multiple Choice

If a project has a cost of $50,000 and a profitability index of 2,then:

• A) it has a negative NPV.
• B) its NPV could be positive or negative depending on the cost of capital.
• C) its cash flow is $100,000.
• D) it has a positive NPV.

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Definitions:

Overtime Expense

Overtime expense refers to the additional costs incurred by an employer for paying employees at higher rates for working beyond their normal hours.

Product Warranty

A guarantee from the manufacturer or seller that a product will meet certain quality and reliability standards or that defective products will be repaired or replaced.

Warranty Obligations

The responsibility of a seller to repair or replace defective goods during a specified period.

Quarterly Entries

are journal entries made in the financial records at the end of each quarter, summarizing the period’s transactions and adjustments.