Bill Plans to Open a Do-It-Yourself Dog Bathing Center in a Storefront

question 102

Multiple Choice

Bill plans to open a do-it-yourself dog bathing center in a storefront. The bathing equipment will cost $160,000. Bill expects the after-tax cash inflows to be $40,000 annually for seven years, after
Which he plans to scrap the equipment and retire to the beaches of Jamaica.
Assume the required return is 17%. What is the project's IRR? Should it be accepted?

• A) 12.2%; yes
• B) 12.2%; no
• C) 16.3%; yes
• D) 16.3%; no
• E) 17.0%; indifferent

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Definitions:

Positive Reinforcement

The process of encouraging or establishing a pattern of behavior by offering rewards or positive outcomes for such behavior.

Individual Differences

Variations among individuals in their physical, psychological, and behavioral characteristics.

Allocating Rewards

The process of distributing benefits, compensation, or recognition to individuals or groups based on their performance or contribution.

Long-run Supply Curve

A graphical representation that shows the relationship between the market price of a product and the quantity supplied by all firms in the long run when all inputs can be varied.