You Are Analyzing a Project and Have Prepared the Following

question 81

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 payback period of _____for this project, you should _____ the project.

• A)1.87 years; accept
• B)2.87 years; accept
• C)2.87 years; reject
• D)3.13 years; reject
• E)3.87 years; reject

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Definitions:

Price Per Barrel

The cost of a barrel of commodities like oil, typically used as a benchmark for pricing.

Estimating Mean Value

The process of calculating the average value of a set of numbers or measurements.

Predicting Individual Value

The process of estimating the monetary or intrinsic value of a specific entity or individual based on relevant parameters.

Coefficient of Determination

is a statistical measure that explains the proportion of variance in the dependent variable predictable from the independent variable(s).