Project a Has Cash Flows of -$74,900, $18,400, $26,300, and $57,100

question 78

Multiple Choice

Project A has cash flows of -$74,900, $18,400, $26,300, and $57,100 for Years 0 to 3, respectively. Project B has cash flows of -$79,000, $18,400, $22,700, and $51,500 for Years 0 to 3, respectively. Both projects are independent, have multiple noncash expenses, and use straight-line depreciation to a zero balance over the project's life. Neither project has any salvage value. Both projects have a required accounting return of 11.5 percent. Should you accept or reject these projects based on the average accounting return?

• A) Accept Project A and reject Project B
• B) Reject Project A and accept Project B
• C) Accept both projects
• D) Reject both projects
• E) The AAR cannot be computed.

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Definitions:

Engrams

Hypothetical units of cognitive information imprinted in the brain that are believed to be the basis for memory.

Memorization

The process of committing information to memory for later retrieval.

False Memories

Distorted or fabricated recollections of events that did not actually happen, often studied in relation to suggestibility and memory formation.

Misinformation

False or inaccurate information that is spread, intentionally or unintentionally, which can influence memory and perception.