Solved

Scenario B

question 24

Multiple Choice

Scenario B.Paul and his wife are investigating the possibility of starting a new restaurant in Beaufort,a small town in the South Carolina low country.It has been Paul's lifelong dream.Paul has won a lottery and is trying to decide if this is what he wants to do with the prize money.He decides to do an analysis of the competitive environment.After his analysis,he discovers several important issues.First,it will cost most of Paul's lottery winnings to finance a restaurant in Beaufort.Second,it will be difficult to attract new customers because they have so many eating choices available to them in Beaufort and the surrounding towns.Finally,the competition in the restaurant industry is considered fierce by industry analysts and this is frightening to someone,like Paul,who has never worked in that industry.
-From Scenario B,based on Paul's analysis of the competitive environment,it can be inferred that

Understand the principle of Capital Cost Allowance (CCA) and its application in depreciation.

Explain the concept of salvage value and its determination at the end of a project’s life.

Evaluate projects using incremental cash flow analysis.

Apply the concept of Equivalent Annual Cost (EAC) to compare mutually exclusive projects with different lives.

Definitions:

GPA

Grade Point Average, a cumulative average of a student's grades, typically on a 4.0 scale.

Independent Variable

A variable that is manipulated to determine if it causes any change to a dependent variable in an experiment.

Dependent Variable

The variable in an experiment or model that is expected to change in response to changes in the independent variable(s).

Scatterplot

A type of plot or mathematical diagram using Cartesian coordinates to display values for typically two variables for a set of data, showing the relationship between them.