Tim Is Considering Two Projects, Both of Which Have an Initial

question 237

True/False

Tim is considering two projects, both of which have an initial cost of $12,000 and total cash inflows of $15,000. The cash inflows of project A are $1,000, $2,000, $4,000, and $8,000 over the next four years, respectively. The cash inflows for project B are $8,000, $4,000, $2,000 and $1,000 over the next four years, respectively. Which one of the following statements is correct if Tim requires a 10 % rate of return and has a required discounted payback period of 3 years? Given this information, Tim should accept project A because it has a payback period of 2.65 years.

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Definitions:

Price Elastic

Refers to the sensitivity of the quantity demanded of a good to a change in its price; high elasticity indicates that demand varies significantly with price.

Brand X Burger

A fictional or hypothetical brand used to discuss marketing, product differentiation, or consumer preference scenarios.

Demand For Food

Demand For Food describes the quantity of food products that consumers are willing and able to purchase at various price levels, usually influenced by factors like income, taste, and price.

Limit Competition

Strategies or practices aimed at reducing the level of competition within a market or industry.