Jessie, the Regional Manager of a Large Electronics Firm, Is

question 101

Multiple Choice

Jessie, the regional manager of a large electronics firm, is trying to determine whether a new warehouse for her firm would be a good investment. After discussing with her firm's financial managers, she concludes that the project carries a negative NPV (Net Present Value) . What should Jessie do and why?

• A) She should invest in the warehouse to increase profits since a negative NPV indicates that the firm needs to generate more funds to stay afloat.
• B) She should not invest in the warehouse since a negative NPV means that the present value of the future cash flows does not justify the cost of the warehouse.
• C) She should invest in the warehouse since a negative NPV means that the cost of financing the warehouse is within the company's budget for expenses.
• D) She should not invest in the warehouse since a negative NPV means that the firm cannot afford the investment.

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Definitions:

Hypothetical Constructs

Abstract concepts or theories that are utilized to describe or explain behaviors and phenomena, but which are not directly observable.

Attitudes

A learned tendency to evaluate things in a certain way, which can include people, issues, objects, or events.

Values

Core beliefs or principles that guide an individual's behavior and decision-making, reflecting what is important to them.

Affective Component

The emotional aspect of an attitude or response, reflecting feelings or emotions associated with a particular object, person, or situation.