Which of the Following Will Have the Largest Dollar Effect

question 63

Multiple Choice

Which of the following will have the largest dollar effect on the net present value of a 10 year investment project?

• A)a decrease of $20,000 in the initial investment required with no effect on the expected salvage value in 10 years.
• B)an increase of $20,000 in the expected salvage value in 10 years with no effect on the initial investment.
• C)a decrease of $20,000 in both the working capital needed to start the project and the amount being released at the end of the 10 years.
• D)an increase of $2,000 in the annual cash inflows from this project.

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Definitions:

Automated Tolerance-Check

An Automated Tolerance-Check is a digital process for verifying if an object, component, or system falls within specified limits or tolerances.

Preventative Maintenance

Maintenance activities performed regularly on equipment before faults occur, aimed at preventing breakdowns and ensuring efficient operation.

Breakdowns

Unplanned stops in machinery or systems due to failure, requiring maintenance or repairs to return to operational state, similar to the concept of Breakdown Maintenance but emphasizing the event rather than the response.

Preventative Measures

Actions taken to reduce the likelihood of an undesirable event occurring, focusing on risk management and safety protocols.