The QT Company Is Generating Cash Flow of $333,000 Per

question 8

Multiple Choice

The QT Company is generating cash flow of $333,000 per year. If they invest in a new press they expect to increase their cash flow to $400,000 per year. The cash outflow for the new press is $250,000; to accept or reject the investment they have to consider:

• A) the press cost of $250,000 and total cash flow of $400,000.
• B) the change in cash flow of $67,000 versus the price cost of $250,000.
• C) the current cash flow of $333,000 and the price cost of $250,000.
• D) the opportunity cost of the facility of $333,000.

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Definitions:

Sample Mean

The mean of a collection of numbers, determined by summing all the numbers in the set and then dividing by the count of the numbers.

Population Mean

The average of a set of characteristics (such as age, weight) of every member of a population.

Consistent Estimator

A statistical property of an estimator indicating that as the sample size grows, the estimator converges in probability to the parameter being estimated.

Confidence Interval

A range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter.