A Firm Is Evaluating a Proposal Which Has an Initial

question 82

Multiple Choice

A firm is evaluating a proposal which has an initial investment of $50,000 and has cash flows of $15,000 per year for five years. If the firm's required return or cost of capital is 15%, should it accept the project using the IRR as a decision criteria?

• A) yes
• B) no
• C) only if the NPV is less than 1
• D) only if the PI is negative

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Definitions:

Tip-Of-The-Tongue Phenomenon

A temporary inability to retrieve a word or name from memory, paired with a sensation that retrieval is imminent.

Déjà Vu

The haunting sense of having previously seen or experienced a new scene or situation.

Jamais Vu

A psychological phenomenon involving a sense of unfamiliarity with a situation that should be familiar.

Psychodynamic Therapy

a therapeutic approach emphasizing the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.