You Are Analyzing a Project and Have Prepared the Following

question 63

Multiple Choice

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

• A)-£2,021.28; reject
• B)-£406.19; reject
• C)£7,978.72; accept
• D)£9,836.74; accept
• E)£12,684.23; accept

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Definitions:

Conditional Distribution

A probability distribution of a variable that is derived from the population of variables dependent on a certain condition.

Automobiles

Wheeled motor vehicles used for transportation, typically powered by an internal combustion engine or electric motor.

Country of Origin

The country in which a person was born or where a product was manufactured or created.

Conditional Distribution

the probability distribution of a subset of variables given the values of other variables.