Ilona Is Considering Two Projects Both of Which Have an Initial

question 35

Multiple Choice

Ilona is considering two projects both of which have an initial cost of $17,000 and total cash inflows of $21,000. The cash inflows of project A are $6,000, $5,000, $5,000, and $5,000 over the next
Four years, respectively. The cash inflows for project B are $9,000, $7,000, $3,000 and $2,000 over
The next four years, respectively. Which one of the following statements is correct if Ilona requires a
12 percent rate of return and has a required discounted payback period of 3.5 years?

• A) Both projects should be accepted.
• B) Neither project ever pays back.
• 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) Both projects should be rejected even though Project B does pay back.

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Definitions:

Supernatural

Phenomena, entities, or forces beyond the natural world and not explained by current scientific understanding.

Collective Unconscious

A concept in Jungian psychology referring to the part of the unconscious mind that is shared among beings of the same species containing universal experiences.

Archetypes

Universal, symbolic images or themes that derive from the collective unconscious, as proposed by Jung, that appear across cultures and times.

Psychic Energy

A concept in psychoanalytic theory referring to the energy generated by the instinctual drives and desires of the id, distributed by the ego to manage reality and moral demands of the superego.