Sloan Inc Recently Invested in a Project with a 3-Year Life

question 116

Multiple Choice

Sloan Inc. recently invested in a project with a 3-year life span. The net present value was $9,000 and annual cash inflows were $21,000 for year 1; $24,000 for year 2; and $27,000 for year 3. The initial investment for the project, assuming a 15% required rate of return, was $\begin{array}{llr}& \text { Present Value } & \text { PV of an Annuity } \\\text { Year } & \text { of } 1 \text { at } 15 \% & \text { of } 1 \text { at } 15 \%\\1 & .870 & .870 \\2 & .756 & 1.626 \\3 & .658 & 2.283\end{array}$

• A) $45,792.
• B) $45,180.
• C) $29,232.
• D) $38,376.

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Definitions:

Observational Learning

A learning process that occurs through observing the behavior of others and the outcomes of those behaviors.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, which was developed by B.F. Skinner.

Learned Helplessness

A condition in which a person suffers from a sense of powerlessness, arising from a traumatic event or persistent failure to succeed, theorized to lead to depression and other mental illnesses.

Psychopathology

The scientific study of mental disorders, including their symptoms, etiology (causes), and treatment.