Douglass Engineering Is Considering a Project That Has an Initial

question 384

Multiple Choice

Douglass Engineering is considering a project that has an initial cost today of $22,000. The project has a two-year life with cash inflows of $13,500 a year. Should the firm decide to wait one year to commence this project, the initial cost will increase by 4 percent and the cash inflows will increase to $14,200 a year. What is the value of the option to wait if the applicable discount rate is 12 percent?

• A) $0
• B) $81.05
• C) $123.33
• D) $141.41
• E) $183.17

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Definitions:

Long-Term Effects

The lasting consequences or impacts of an event, action, or condition that may not be apparent immediately but are observed over a prolonged period.

Behaviour Modification Program

A systematic approach to changing behaviors through the application of principles of learning, including reinforcement and punishment.

Baseline Data

Initial information gathered before a research or treatment begins, used for comparison with data collected during or after the process.

Target Behaviour

Refers to a specific action or reaction that therapy or intervention aims to change or reinforce.