In the Net Present Value Method,the Disposal Value of a Long-Term

question 120

Multiple Choice

In the net present value method,the disposal value of a long-term asset at the end of its useful life is considered to be a ________.

• A) cash outflow at time zero
• B) cash inflow at time zero
• C) cash outflow in the year of disposal
• D) cash inflow in the year of disposal

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Definitions:

Marginal Productivity

Refers to the increase in output that arises from an additional unit of input, assuming all other factors of production remain constant.

Marginal Productivity Theory

An economic theory suggesting that payment to factors of production equates to their marginal contribution to the output.

Value Added

The increase in the value of a product or service as a result of a particular process, typically measured as the difference between the cost of inputs and the price it's sold for.

Profit-Maximizing

A strategy or point whereby a firm selects the output level at which its profits are at their highest.