Your Friend Wants to Purchase Some Expensive Software That Claims

question 123

Multiple Choice

Your friend wants to purchase some expensive software that claims to to be scientifically proven to allow you to memorize entire books. He says that he knows someone whose grades went up after buying the software. What advice would you give to your friend about this program?

• A) If it is 'proven' then it must be based on true science.
• B) Anecdotal evidence about effectiveness is not reliable.
• C) The program must work because there is good evidence for most speed-reading programs.
• D) The claim sounds scientific and connects with previous research so it is worth investigating.

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Definitions:

Capital Budgeting Projects

Capital budgeting projects are long-term investment decisions made by companies to invest in assets and projects for future growth and profitability.

Corporate WACC

Weighted Average Cost of Capital for a corporation, which is the average rate of return it must earn on its investments to maintain the value of its stock and pay its debt.

Expected Returns

The projected average return of an investment over a specified period, accounting for various possible outcomes.

After-Tax Cost of Debt

The net cost of debt to a company after accounting for the tax benefits of interest expenses.