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A Manager Is Considering Investing in a New Machine That

Question 13

Multiple Choice

A manager is considering investing in a new machine that costs $2.5 million.He identifies four uncertain variables: sales,fixed costs,advertising costs and the life of the new machine.The required rate of return is 15% p.a.Given the following information,determine which variable is most sensitive to changes or errors: A manager is considering investing in a new machine that costs $2.5 million.He identifies four uncertain variables: sales,fixed costs,advertising costs and the life of the new machine.The required rate of return is 15% p.a.Given the following information,determine which variable is most sensitive to changes or errors: A) Sales. B) Fixed costs. C) Advertising costs. D) Life of machine.


A) Sales.
B) Fixed costs.
C) Advertising costs.
D) Life of machine.

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