A Company Finds That the Residual Value of $8,000 for the Equipment

question 14

Multiple Choice

A company finds that the residual value of $8,000 for the equipment in a capital budgeting project has been inadvertently omitted from the calculation of the net present value (NPV) for that project. How does this omission affect the NPV of that project?

• A)The project's NPV should be higher, but be less than $8,000 higher, with the residual value included.
• B)The project's NPV should be $8,000 higher with the residual value included.
• C)The project's NPV should be $8,000 lower with the residual value included.
• D)The project's NPV should be lower, but be less than $8,000 lower, with the residual value included.

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Definitions:

Practical Side

The aspect of a situation, problem, or decision that relates to actual experience or to the practicalities of implementing something.

Control Processes

The methods and techniques used to regulate, guide, and manage operations, systems, or mechanisms.

Emotional Regulation

The ability to effectively manage and respond to an emotional experience, including how one expresses or suppresses emotions.

Selective Attention

The cognitive process of focusing on a particular object or task for a period of time while ignoring irrelevant information that is also occurring.