Peanut CoHas 2 Projects in Which It Can Invest

question 37

Multiple Choice

Peanut Co.has 2 projects in which it can invest.Project X has a $300,000 initial cost and will return $600,000 before tax in year 2.Project Y has $600,000 initial cost and will return $1,000,000 before tax in year 4.The company uses an 8 percent discount rate for project evaluation and its marginal tax rate is expected to be 21 percent in all years.Which project(s) should Peanut Co.invest in?

• A)Project X only
• B)Project Y only
• C)Both projects
• D)Neither project

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Definitions:

Organizational Politics

Refers to the activities carried out within organizations to acquire, develop, and use power and other resources to obtain one's preferred outcomes in a situation where there is uncertainty or disagreement.

Political Skill

An interpersonal style that manifests itself in being socially astute and engaging in behaviors that lead to feelings of confidence, trust, and sincerity.

Social Awareness

The ability to understand and respond to the feelings, needs, and concerns of others, including recognizing social cues and appropriately adapting behavior.

Empowerment

The process of giving individuals or groups more control, authority, and responsibility regarding their own lives or work.