Assume That the Economy Is Enjoying a Strong Boom,and as a Result

question 6

Multiple Choice

Assume that the economy is enjoying a strong boom,and as a result interest rates and money costs generally are relatively high.The WACC for two mutually exclusive projects that are being considered is 12%.Project S has an IRR of 20% while Project L's IRR is 15%.The projects have the same NPV at the 12% current WACC.However,you believe that the economy will soon fall into a mild recession,and money costs and thus your WACC will soon decline.You also think that the projects will not be funded until the WACC has decreased,and their cash flows will not be affected by the change in economic conditions.Under these conditions,which of the following statements is CORRECT?

• A) You should reject both projects because they will both have negative NPVs under the new conditions.
• B) You should delay a decision until you have more information on the projects,even if this means that a competitor might come in and capture this market.
• C) You should recommend Project L,because at the new WACC it will have the higher NPV.
• D) You should recommend Project S,because at the new WACC it will have the higher NPV.
• E) You should recommend Project L because it will have both a higher IRR and a higher NPV under the new conditions.

Understand the perspective of Hardt and Negri on contemporary global capitalism and their proposal for a counter-empire.

Recognize the shift towards immaterial, intellectual, and communicative labor as central in today's world of production, as seen by Hardt and Negri.

Apply Ritzer's concept of McDonaldization to analyze various work environments.

Distinguish between traditional Marxist views and contemporary theories on global exploitation and consumer culture.

---

Definitions:

Ingroup Bias

The tendency to favor members of one's own group over those in other groups.

Social Comparison

The process of comparing oneself to others in order to evaluate one's own abilities, status, or situation.

Cautious

Describes a behavior characterized by careful foresight to avoid potential risks or dangers.

Extraversion

A personality trait characterized by outgoingness, high levels of sociability, and a preference for social interaction.