A Company Is Considering a Proposed New Plant That Would

question 50

Multiple Choice

A company is considering a proposed new plant that would increase productive capacity. Which of the following statements is correct?

• A) In calculating the project's operating cash flows, the firm should NOT deduct financing costs such as interest expense, because financing costs are accounted for by discounting at the WACC. If interest were deducted when estimating cash flows, it would in effect be "double-counted."
• B) Since depreciation is a noncash expense, the firm does not need to deal with depreciation when calculating the operating cash flows.
• C) When estimating the project's operating cash flows, it is important to include any opportunity costs and sunk costs, but the firm should ignore cash flow effects of externalities since they are accounted for in the discounting process.
• D) Capital budgeting decisions should be based on before-tax cash flows.

Analyze the relationship between organizational strategies/goals and organizational structure/design.

Understand various methods of performance appraisal and common errors in performance measurement.

Recognize the significance of job design, including job enrichment, job enlargement, and job rotation, in enhancing employee satisfaction and performance.

Explain the concept of alternative work arrangements, such as part-time work, job sharing, and telecommuting, and their benefits to both individuals and organizations.

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Definitions:

Meaningful and Significant

Pertaining to having deep importance, value, or purpose that affects an individual or group profoundly.

Authentic Therapeutic Relationship

A genuine and open relationship between therapist and client that enhances the healing process in therapy.

Authenticity

The quality of being genuine or true to one's own personality, spirit, or character, despite external pressures.

European Existentialists

Refers to a group of European philosophers and writers who focused on themes of existentialism, including the meaning of life, freedom, and the nature of existence.