Shawn's Health Care Is Considering a Project Which Will Produce

question 359

Multiple Choice

Shawn's Health Care is considering a project which will produce sales of $1.7 million a year for the next ten years. The profit margin is estimated at 8 %. The project will cost $2.9 million and will be depreciated straight-line to a zero book value over the life of the project. Shawn's has a required accounting return of 9 %. This project should be _____ because the AAR is _____.

• A) Accepted; 8.44 %
• B) Accepted; 9.38 %
• C) Accepted; 9.82 %
• D) Rejected; 8.44 %
• E) Rejected; 9.38 %

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Definitions:

Payoffs

The outcomes or returns from an action, investment, or decision, quantified in terms of profit or loss.

Develop

The process of growing, expanding, or improving something through a series of steps or stages.

Clinical Trials

Research studies performed in humans that are aimed at evaluating a medical, surgical, or behavioral intervention.

Successful

The achievement of set goals or objectives, often marked by favorable outcomes.