Ginny Trueblood Is Considering an Investment Which Will Cost Her

question 130

Multiple Choice

Ginny Trueblood is considering an investment which will cost her $120,000. The investment produces no cash flows for the first year. In the second year the cash inflow is $35,000. This inflow
Will increase to $55,000 and then $75,000 for the following two years before ceasing permanently.
Ginny requires a 10 percent rate of return and has a required discounted payback period of three
Years. Ginny should _____ this project because the discounted payback period is _____

• A) Accept; 2.03 years.
• B) Accept; 2.97 years.
• C) Accept; 3.97 years.
• D) Reject; 3.03 years.
• E) Reject; 3.97 years.

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Definitions:

Establish

To set up, start, found, or create something on a firm or permanent basis.

Contract Involved

Relates to situations or disputes where a formal agreement between parties, outlining duties, rights, and obligations, is central to the matter at hand.

Types of Fraud

Categories of deceitful activities intended to gain dishonest advantages, often financial in nature.

Effect

The result or outcome of a particular cause or action.