1. ABC Company is considering the purchase of a new machine to replace its old machine. The salvage value of the old machine was assumed to be zero. ABC Company computed the projects NPV based on that assumption.

If instead, the old machine could be sold for $20,000, what would be the impact on the net present value of the proposal to purchase the new machine as first computed above by ABC Company?

a.	It would increase the net present value of the proposal to purchase the new machine.
b.	It would decrease the net present value of the proposal to purchase the new machine.
c.	It would not affect the net present value of the proposal to purchase the new machine.
d.	Potentially, it could increase or decrease the net present value of the new machine.

2. Deciding whether or not an investment meets a predetermined company requirement like the minimum desired rate of return is called a:

a.	preference decision.
b.	payback decision.
c.	screening decision.
d.	profitability decision.

3. A company choosing between two or more acceptable investment alternatives is called a:

a.	profitability decision.
b.	payback decision.
c.	screening decision.
d.	preference decision.