The Square Box Is Considering Two Independent Projects with an Initial

question 91

Multiple Choice

The Square Box is considering two independent projects with an initial cost of $18,000 each. The cash inflows of Project A are $3,000, $7,000, and $10,000 for Years 1 to 3, respectively. The cash inflows for Project B are $3,000, $7,000, and $15,000 for Years 1 to 3, respectively. The required return is 12 percent and the required discounted payback period is 3 years. Based on discounted payback, which project(s) , if either, should be accepted?

• 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.

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Definitions:

Pituitary Glands

A small, pea-sized gland located at the base of the brain, crucial for regulating vital body hormones and functions.

Oxytocin

A hormone and neurotransmitter involved in childbirth and breast-feeding, also associated with behaviors such as bonding, trust, and empathy.

Pitocin

A synthetic form of oxytocin used medically to induce labor and control bleeding after childbirth.

Respiratory Distress Syndrome

A medical condition often seen in premature infants, characterized by difficulty in breathing due to insufficient surfactant in the lungs.