Carr Company Is Considering Two Capital Investment Proposals The Company Requires a 10% Rate of Return on All

question 33

Multiple Choice

Carr Company is considering two capital investment proposals.Estimates regarding each project are provided below: $\begin{array}{lll}&\underline{\text { Project Soup }}&\underline{ \text { Project Nuts} }\\\text { Initial investment } & \$ 270,000 & \$ 600,000 \\\text { Annual net income } & 27,000 & 45,000 \\\text { Net annual cash inflow } &90,000 & 142,000 \\\text { Estimated useful life } & 5 \text { years } & 6 \text { years } \\\text { Salvage value } & -0 \text { - } & -0 \text { - }\end{array}$
The company requires a 10% rate of return on all new investments.
$\quad$$\quad$$\text { Present Value of an Annuity of } 1$
$\begin{array}{lllll}\underline{\text { Periods }} &\underline{9 \%} &\underline{10 \%}&\underline{11 \%} & \underline{12 \%}\\5 &3.890 & 3.791 & 3.696 &3.605 \\6 & 4.486 & 4355 & 4.231 & 4.111\end{array}$
The internal rate of return for Project Nuts is approximately

• A)10%.
• B)11%.
• C)12%.
• D)9%.

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Definitions:

Applied Psychology

This refers to the use of psychological methods and findings of scientific psychology to solve practical problems of human and animal behavior and experience.

Behaviourism

A field of psychology that focuses on observing and analyzing how behavior is learned and influenced by the environment, without invoking thoughts or feelings.

Functionalism

A theory in sociology and psychology which emphasizes the importance of understanding the purpose or function of behavior, institutions, and processes in society and the mind.

Verifiability Of Observation

The principle that empirical observations must be capable of being checked or validated by other observers.