Explanation

Under LIFO, the oldest inventory is held in inventory for the longest period.

It can lead to outdated inventory costs on the balance sheet.

As the cost of inventory held may be significantly different from its current market value or replacement cost.

Explanation

Compound interest is typically used in personal loans and mortgages

As it takes into account the accrued interest over time.

It resulting in a higher total interest paid over the life of the loan.

Explanation

The interest earned per year is $2000 x 4% = $80.

Since the investment is for 3 years.

The total interest earned is $80 x 3 = $240.

Explanation

Profit before interest and taxes (PBIT) is also known as Earnings Before Interest and Taxes (EBIT).

EBIT is a measure of a company's profitability, excluding interest expenses and taxes.

It is often used to evaluate a company's underlying financial performance.

Explanation

If future cash flows are underestimated, NPV decreases.

As the present value of the projected cash flows is lower than their actual value.

This leads to a lower NPV, potentially causing a viable project to appear unfavorable.

Explanation

A delay in cash inflows decreases NPV.

As the present value of future cash flows is reduced when they are delayed.

This reduction in NPV reflects the time value of money.

Explanation

Future cash flows are discounted in NPV calculations to their present value using a discount rate.

It accounting for time value and risk.

Explanation

NPV calculation considers both initial investment and future cash inflows/outflows.

It accounting for the total investment cost and expected returns.

It enabling a comprehensive evaluation of a project's financial viability.

Explanation

An increase in beginning inventory decreases COGS.

As more inventory is already on hand and less needs to be purchased or produced.

This reduces the cost of goods sold, as the cost of the existing inventory is not included in COGS.

Explanation

Using a higher discount rate reduces the present value of future cash flows.

It decreases the project's IRR, making the project less attractive.