Would You Accept a Project Which Is Expected to Pay

question 235

Multiple Choice

Would you accept a project which is expected to pay $10,000 a year for seven years if the initial investment is $40,000 and your required return is 15%?

• A) Yes; the NPV is $1,604
• B) Yes; the NPV is $1,446
• C) Yes; the NPV is $4,238
• D) No; the NPV is -$1,369
• E) No; the NPV is -$2,783

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Definitions:

Standard Deviation

The statistical metric that calculates the dispersion or spread of data points in a dataset around the average value.

Raw Score

An untreated score before manipulation or processing to make it a standard score, as must be done for all norm-referenced tests. Raw scores alone tell us little, if anything, about how a person has done on a test. We must take an individual’s raw score and do something to it to give it meaning.

Publisher Score

The score provided or established by the entity responsible for creating and distributing a test, indicating a test taker's performance relative to predefined criteria or norms.

Ordinal Scale

A scale of measurement in which the magnitude or rank order is implied; however, the distance between measurements is unknown.