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:

Multiple Regression

A mathematical method for modeling the connection between a single dependent variable and multiple independent variables.

F Statistic

A measure used in statistical analysis to assess the significance of a group of variables in a regression model.

P-value

The likelihood of witnessing outcomes in a test that are as significant or more so, given the premise that the null hypothesis is true.

Promotional Expenditures

The financial resources spent on marketing and advertising campaigns to boost sales or raise awareness.