Suppose Your Firm Is Considering Investing in a Project with the Cash

question 101

Multiple Choice

Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistic for the project are two and two and a half years, respectively.
$$\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \\\hline \text { Cash Flow } & - 125,000 & 65,000 & 78,000 & 105,000 & 105,000 & 25,000 \\\hline\end{array}$$
Use the PI decision rule to evaluate this project; should it be accepted or rejected?

• A) ?1.21 percent, reject
• B) 1.08 percent, accept
• C) 1.21 percent, accept
• D) 121 percent, accept

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Domain of Biology

A branch of science concerned with the study of living organisms and their interactions with each other and their environments.

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The biological transmission of characteristics from one generation to the next.

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The ability to attribute mental states—beliefs, intents, desires, emotions, knowledge—to oneself and others, and to understand that others have beliefs, desires, and intentions different from one's own.

Theory of Mind

The ability to attribute mental states—beliefs, intents, desires, emotions—to oneself and others and understand that others have beliefs, desires, and intentions that differ from one’s own.