Twin Hills Inc

question 22

Multiple Choice

Twin Hills Inc. is considering a proposed project. Given available information, it is currently estimated that the proposed project is risky but has a positive net present value. Which of the following factors would make the company less likely to adopt the current project?

• A) It is revealed that if the company proceeds with the proposed project, the company will lose two other accounts, both of which have positive NPVs.
• B) It is revealed that the company has an option to back out of the project 2 years from now, if it is discovered to be unprofitable.
• C) It is revealed that if the company proceeds with the project, it will have an option to repeat the project 4 years from now.
• D) Answers a and b are correct.
• E) Answers b and c are correct.

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Definitions:

Meaningless Materials

Items or content lacking significance, purpose, or relevance.

Relearning

The process of learning information or skills that were previously learned and then forgotten, which typically takes less time than the initial learning.

Retroactive Interference

The phenomenon where newly acquired information interferes with the recall of information learned previously.

Pseudoforgetting

The phenomenon where information was never properly encoded into memory, giving the illusion it has been forgotten.