All Else Being Equal,a Company Would Choose to Invest in a Capital

question 17

Multiple Choice

All else being equal,a company would choose to invest in a capital asset if which of the following is true?

• A)If the payback period equals the amount invested
• B)If the expected accounting rate of return is less than the required rate of return
• C)If the average amount invested is equal to the net cash inflows
• D)If the expected accounting rate of return is greater than the required rate of return

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Definitions:

Contribution Margin Ratio

The percentage of each sales dollar that remains after variable costs are subtracted, contributing to covering fixed costs and generating profit.

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume, such as rent, insurance, and property taxes.

Cost Structure

The composition of a company's fixed and variable costs, which influences its profitability and pricing strategies.

Special Order

A one-time or unusual order for products or services, often requiring customization or a departure from standard production processes.