When Evaluating a Project, Companies Should Always Use

question 72

Multiple Choice

When evaluating a project, companies should always use

• A)the Bank of Canada rate of interest.
• B)the rate that is currently charged at its bank.
• C)the current corporate borrowing rate.
• D)the corporate borrowing rate adjusted for any perceived risk of the project.

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Definitions:

Nonprogrammed Decisions

Decisions made to handle unique, non-recurring or novel situations, often requiring creative problem-solving.

Programmed Decisions

Decisions that are routine and repetitive, often made using predetermined rules or policies.

Escalation Of Commitment

The phenomenon where individuals or organizations continue to invest in a decision despite new evidence suggesting it may be a poor choice, often to justify previous investments.

Reality Checks

Moments or instances where one is forced to recognize the true nature of a situation, often contradicting prior beliefs or expectations.