Corey Is Considering Two Projects Both of Which Have an Initial

question 91

Multiple Choice

Corey is considering two projects both of which have an initial cost of $20,000 and total cash inflows of $25,000. The cash inflows of project A are $3,000, $5,000, $8,000, and $9,000 over the
Next four years, respectively. The cash inflows for project B are $9,000, $8,000, $5,000, and
$3,000 over the next four years, respectively. Which one of the following statements is correct if
Corey requires a 10 percent rate of return and has a required discounted payback period of 3
Years?

• A) Both projects should be accepted.
• B) Both projects should be rejected.
• C) Project A should be accepted and project B should be rejected.
• D) Project A should be rejected and project B should be accepted.
• E) You should be indifferent to accepting either or both projects.

---

Definitions:

Reinforcement Theory

A psychological concept suggesting that behavior can be shaped by rewarding or punishing outcomes.

Law of Effect

A principle in psychology that behaviors followed by positive outcomes are likely to be repeated, while those followed by negative outcomes are not.

Premise

A premise is a previous statement or proposition from which another is inferred or follows as a conclusion.

Self-efficacy Theory

A psychological theory asserting that an individual’s belief in their own ability to succeed influences their motivation and performance in various settings.