A Project Has a Net Initial Investment of $500,000 and the Cash

question 127

Multiple Choice

A project has a net initial investment of $500,000 and the cash flows cover five years.The project involves replacing an old machine with a new machine at the same time.Which of the following is TRUE based on the above assumptions, in NPV analysis?

• A)The book value of the old machine is relevant.
• B)Recurring operating cash flows cannot be positive and negative.
• C)Incremental working capital investment is irrelevant.
• D)Any cash received from the disposal of the old machine would be a relevant cash flow for end of year 1.
• E)Errors in forecasting the terminal disposal price of the new machine are seldom critical on long-duration projects.

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The extent to which a measure correlates with an independent criterion (standards) considered as the representing the same construct.

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The extent to which a test measures what it claims to measure, reflecting the accuracy of operationalizing a concept or construct.

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A classification in educational psychology referring to individuals, especially children, who demonstrate outstanding aptitude or competence in one or more domains.