Required Payback Period: 2

question 11

Multiple Choice

$$\begin{array}{l}\text { You are analyzing a project and have prepared the following data: }\\\begin{array} { | l | l | } \hline \text { Year } & \text { Cash Flow } \\\hline 0 & - £ 169,000 \\\hline 1 & £ 46,200 \\\hline 2 & £ 87,300 \\\hline 3 & £ 41,000 \\\hline 4 & £ 39,000 \\\hline\end{array}\end{array}$$ Required payback period: 2.5 years Required AAR: 7.25%
Required return: 8.50%
Based on the profitability index of _____ for this project, you should _____ the project.

• A).97; accept
• B)1.05; accept
• C)1.18; accept
• D).97; reject
• E)1.05; reject

---

Definitions:

Highest Levels

The most extreme or advanced point within a specific context or system.

Photochemical Smog

Air pollution created by the reaction of sunlight with pollutants such as nitrogen oxides and volatile organic compounds in the Earth's atmosphere.

Primary Pollutants

Pollutants that are emitted directly from identifiable sources and enter the air or water in a harmful form.

Sulphur Dioxide

A toxic gas with a pungent, irritating smell, produced by burning sulfur in the air. It is used as an industrial pollutant and also occurs naturally in volcanic emissions.