In a Make-Or-Buy Decision,which of the Following Is the Fundamental

question 136

Multiple Choice

In a make-or-buy decision,which of the following is the fundamental question that is asked in making the decision?

• A) What is the difference in present costs between the two alternatives?
• B) What is the difference in present revenues between the two alternatives?
• C) What is the difference in future revenues between the two alternatives?
• D) What is the difference in future costs between the two alternatives?

---

Definitions:

Capital Gain

The increase in value of an asset or investment above its purchase price, often realized upon sale of the asset.

Total Return

The complete return on an investment over a given time period, including both capital gains and dividends or interest, expressed as a percentage of the initial investment cost.

Dividends

Payments made by a corporation to its shareholder members as a distribution of profits.

Canadian Treasury Bills

Short-term government securities issued by the Government of Canada, maturing in one year or less, and used as a means for the government to raise funds.