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:

Elastic

A term that describes the sensitivity of the demand for a good or service to a change in its price, with "elastic" demand being significantly responsive to price changes.

Least Elastic

Describes a situation where there is the smallest responsiveness of the quantity demanded or supplied to changes in price, typically associated with goods and services for which there are no close substitutes.

Price Sensitive

A term describing how the demand for a product changes in response to price changes; consumers are highly reactive to changes in price.

Elastic Demand

A situation in which the demand for a product or service significantly changes in response to a change in its price.