A Project Has a Discount Rate of 15

question 42

Multiple Choice

A project has a discount rate of 15.5 percent, an initial cost of $109,200, an inflow of $56,400 in Year 1 and an inflow of $75,900 in Year 2. Your boss requires that every project return a minimum of $1.06 for every $1 invested. Based on this information, what is your recommendation on this project?

• A) Accept the project because the PI is .97
• B) Reject the project because the PI is .97
• C) Accept the project because the PI is 1.03
• D) Reject the project because the PI is 1.01
• E) Reject the project because the PI is 1.03

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Definitions:

Positive Reinforcement

The addition of a rewarding stimulus following a desired behavior, encouraging its future occurrence.

Negative Reinforcement

A process in behavioral psychology where the removal of an undesirable outcome or stimulus increases the likelihood of a behavior being repeated.

Punishment

The imposition of a penalty as retribution for an offense, with the aim of correcting behavior or serving as a deterrent.

Scapegoat

A person or group unfairly blamed for problems or issues, often as a means of deflecting responsibility or criticism.