Elderkin& Martin Is Considering an Investment Which Will Cost $259,000

question 256

Multiple Choice

Elderkin& Martin is considering an investment which will cost $259,000. The investment produces no cash flows for the first year. In the second year, the cash inflow is $58,000. This inflow will increase to $150,000 and then $200,000 for the following two years before ceasing permanently. The firm requires a 14 % rate of return and has a required discounted payback period of three years. The firm should _____ the project because the discounted payback period is _____ years. Accept or reject this project? Why?

• A) accept; 2.26
• B) accept; 2.49
• C) accept; 3.96
• D) reject; 3.26
• E) reject; 3.96

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Definitions:

Drinking Water

Water that is safe for human consumption, free from contaminants and harmful bacteria.

Water Resources

The natural sources of water available for human use, including lakes, rivers, aquifers, and rainwater, crucial for survival, agriculture, and industry.

Social Justice

Social justice is the concept of fair and just relations between the individual and society, measured by the distribution of wealth, opportunities for personal activity, and social privileges.

Economic Justice

The concept or philosophy that aims to ensure fairness in the distribution of wealth, opportunities, and privileges within a society.