Jacko Corporation Has Two Projects in Which It Can Invest

question 15

Multiple Choice

Jacko Corporation has two projects in which it can invest.Project A has a $500,000 initial cost and will return $700,000 after tax in 4 years.Project B has a $300,000 initial cost and its after-tax returns will be $150,000 in year 1 and $200,000 in year 2.Using a 7 percent discount rate for evaluation, which project(s) should Jacko invest in?

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

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Definitions:

Ecological Fallacy

A logical error that arises when conclusions about individual behavior are drawn from group data.

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A measure of an individual's ability to understand, utilize, and adapt to technology effectively.