Which of the Following Statements Is FALSE

question 39

Multiple Choice

Which of the following statements is FALSE?

• A) The higher the minimum desired rate of return, the lower the present value of each future cash flow.
• B) Higher required rates of return lead to lower net present values for capital investments.
• C) Higher required rates of return lead to higher net present values for capital investments.
• D) The net present value for a project can be negative or positive depending on the minimum desired rate of return used.

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Definitions:

Fixed Overhead

Fixed overhead refers to indirect costs that remain relatively stable regardless of the level of production or sales, such as salaries of administrative personnel and depreciation of buildings.

Variable Overhead

Costs that change in proportion to the level of activity or volume of production in a company.

Direct Labor

The wages and benefits paid to employees who are directly involved in the production of goods or delivery of services.

Direct Materials

Raw materials that are directly traceable to the production of goods, considered a variable cost.