CFA Practice Question

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CFA Practice Question

Jack runs a small bagel shop and is considering replacing his four employees with automated machines that allow customers to buy their bagels without any human interaction. Of the following, the most difficult task Jack faces in computing the NPV of this change is estimation of the ______

A. total change in sales that will result from the change.
B. cost of purchasing the new equipment.
C. reduction in wages he will have from the decrease in work force.
D. reduction in taxes he will get from the increase in depreciation.
E. cost of installing the new equipment.
Correct Answer: A

User Contributed Comments 16

User Comment
zwer hmm...
kalps Well the rest of them are all predictable through estimates - sales is the only one that is an unknown variable
mikaelian he can't estimate the amount of sales that he'll lose as customers will go to Einstein Bagel to deal with humans not machines
AyshaAli will production = sales, cant detect this information so it sales which is hard to detect
wink44 Anyone ever seen one of these bagelmaker4000's?
pierreE14 Bagels ?? !! :(
I miss France sometimes...
chris12345 i like bagels. i sometimes have them with ham and cream cheese, it is a very tasty snack
mattg seriously, just have a donut
erinelize chris - Yes! Best snack ever!
dipu617 I never saw any Bagel in France!!!
Kobe8kenji never eaten one before :(
moneyguy Nothing like a Breakfast Bagel Sandwich!!
Shaan23 Idiots. Screwed up my studying. Now i'm having a hankering for bagels and a nap
ldfrench Geez, Shaan23. Someone needs to take a "CHILL" pill. Am I right, guys?
cfastudypl Yes, you are right Idfrench, some laugh is just necessary to keep the study lively.
kseeba17 I don't care said Piere, I'm from France. Honorary CFA level 1 for whoever knows the reference.
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