Aroma Candles, Inc

question 77

Multiple Choice

Aroma Candles, Inc. is evaluating a project with the following cash flows. The project involves a new product that will not affect the sales of any other project. Which two methods would always lead to the same accept/reject decision for this project, regardless of the discount rate? Year Cash Flows
0 ($120,000)
1 $30,000
2 $70,000
3 $90,000

• A) Payback and Discounted Payback
• B) NPV and Payback
• C) NPV and IRR
• D) Discounted Payback and IRR

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Definitions:

Total Cost

The complete cost of production, including both fixed costs that do not change regardless of the output level and variable costs that increase or decrease with the level of production.

Perfectly Competitive

A market structure characterized by numerous small firms, identical products, and free entry and exit, leading to firms being price takers.

Marginal Revenue

The supplementary earnings obtained through the sale of one more unit of any good or service.

Total Revenue

The total amount of money generated from the sale of goods or services before any costs or expenses are deducted.