Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
Which one of the following statements about costs is correct? Total costs will decrease as the variable cost per unit increases, all else held constant
Which one of the following statements about costs is correct?
-
Total costs will decrease as the variable cost per unit increases, all else held constant.
-
The higher the total costs, the larger the net present value of a project.
-
A decrease in total fixed costs will increase the net present value of a project, all else held constant.
-
Total costs will be greater under the best-case scenario than under the base-case scenario.
-
An increase in the variable cost per unit will increase the contribution margin, all else held constant.
Expert Solution
While calculating the net present value, the formula used is-
NPV = - initial investment + cash inflow/(1+i)^n
Here, if the fixed cost reduces, the NPV is bound to increase as the initial investment falls. Hence, the correct option is-
A decrease in total fixed costs will increase the net present value of a project, all else held constant.
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
