All of the Following Are Related to a Proposed Project

question 17

Multiple Choice

All of the following are related to a proposed project.Which of these should be included in the cash flow at time zero?
I.purchase of $1,400 of parts inventory needed to support the project
II.loan of $125,000 used to finance the project
III.depreciation tax shield of $1,100
IV.$6,500 of equipment needed to commence the project

• A)I and II only
• B)I and IV only
• C)II and IV only
• D)I, II, and IV only
• E)I, II, III, and IV

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Definitions:

Deadweight Loss

A loss of economic efficiency that can occur when equilibrium in a market is not achieved or is not achievable.

Free Trade

An economic policy that allows imports and exports among member countries with little to no tariff barriers, quotas, or subsidies.

Total Output

Total output refers to the total quantity of goods and services produced within an economy at a given time period, reflecting the aggregate production level.

Comparative Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower opportunity cost than its competitors.