A company is considering the purchase of a new machine for cash. The company is

Question

A company is considering the purchase of a new machine for cash. The company is using the net present value method to evaluate this capital expenditure. The machine will be purchased if the sum of the present values of the future net cash flows is lower than the capital investment at the beginning of the project. lor than the casott the beginig af the project. higher than the capital investment at the beginning of the project. O lower than the net income from the project. higher than the net income from the project

Explanation / Answer

correct option is "B" -higher than the capital investment at the beginning of project.

NPV = Present value of cash flow -Initial investment

2)correct option is "B" -Actual price is more than standard price

Price variance = Actual quantity (actual price -standard price)

3)correct option is "B" -production supervisor

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