A Firm Is Evaluating Two Projects That Are Mutually Exclusive

question 107

Multiple Choice

A firm is evaluating two projects that are mutually exclusive with initial investments and cash flows as follows:
$\begin{array}{rr}\text { Project: A }&&\text { Project: B }\\\hline\text { Initial } & \text { End-of-Year } & \text { Initial } & \text { End-of-Year } \\\text { Investment } & \text { Cash Flows } & \text { Investment } & \text { Cash Flows }\\\hline\$40,000&\$20,000&\$90,000&\$40,000\\&20,000 && 40,000 \\&20,000 && 80,000\end{array}$
-If the firm in Figure 12.5 has a required payback of two (2) years, they should

• A) reject project A and accept B.
• B) accept projects A and B.
• C) accept project A and reject B.
• D) reject both.

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Definitions:

Transtheoretical Model

A theoretical model of behavior change that outlines stages from not considering change to maintaining new behavior.

Community Psychology

A branch of psychology focusing on understanding individuals within their social communities and promoting community well-being.

Mental Health

A state of well-being in which an individual realizes their own abilities, can cope with the normal stresses of life, can work productively, and is able to make a contribution to their community.

Disadvantaged Circumstances

Conditions that negatively affect individuals' or groups' ability to access opportunities, resources, and rights, contributing to inequality and hindering personal and societal development.