A firm is trying to determine if it should launch a product. The product has an expected life of three years. It will bring in cash flows of $10,000 in each of the three years. The company estimates that it will invest $28,000 in product research and development costs. Assume a discount rate of 8%. Based on NPV, what should the firm do?
a. Launch the product because NPV is greater than the amount to be invested
b. Not launch the product because NPV is greater than the amount to be invested
c. Launch the product because the amount to be invested is greater than NPV
d. Not launch the product because the amount to be invested is greater than NPV
d. Not launch the product because the amount to be invested is greater than NPV
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An example of a firm's use of a different set of accounting principles for financial reporting and for income tax reporting is
a. the allowance method for financial reporting and the direct write-off method for income tax reporting. b. the direct write-off method for financial reporting and the allowance method for income tax reporting. c. the direct write-off method for financial reporting and the percentage of sales method for income tax reporting. d. the allowance method for financial reporting and the percentage of payables method for income tax reporting. e. none of the above.
Moreland Manufacturing Inc Moreland Manufacturing Inc produces and sells stainless steel faucets. In the current year, the company had budgeted for the production and sale of 6,000 faucets but, due to unexpected demand, 7,000 faucets were actually produced and sold. Each faucet has a standard requiring 15 ounces of direct material at a cost of $.40 per ounce and 15 minutes of assembly time at a
cost of $.20 per minute. Actual costs for the production of 7,000 faucets were $41,359.50 for materials (106,050 ounces purchased and used @ $.39 per ounce) and $21,560 for labor (98,000 minutes @ $.22 per minute). Refer to the Moreland Manufacturing Inc information above. Moreland's direct labor rate variance is: A) $2,100 F. B) $1,800 F. C) $1,960 U. D) $ 560 U.
If a company produces the same number of units per period over an asset's useful life, each period's depreciation expense using the straight-line method will be the same as that recorded using the units-of-production method.
Answer the following statement true (T) or false (F)
Preparing a budget should be the sole task of the most important department in an organization.
Answer the following statement true (T) or false (F)