A Company Is Trying to Decide Which of Two Independent

question 239

Multiple Choice

A company is trying to decide which of two independent projects they should accept. The company is concerned that the estimates provided for the projects are overly optimistic. In this case, the firm should:

• A) Ignore DOL, and select the highest NPV project.
• B) Consider both DOL and NPV when making the decision.
• C) Select the project with the highest accounting return.
• D) Select the project with the shortest payback period.
• E) Select the project with the lowest DOL.

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Definitions:

Fixed Interval

A schedule of reinforcement where the first response is rewarded only after a specified amount of time has elapsed.

Variable Ratio

A reinforcement schedule where the number of responses required to receive a reward varies, leading to high and consistent rates of response.

Salient

Something that stands out conspicuously or is most noticeable or important.

Preceding

Occurring or coming before something else in time or order.