Real Time Systems Inc

question 40

Multiple Choice

Real Time Systems Inc.is considering the development of one of two mutually exclusive new computer models.Each will require a net investment of R5,000.The cash flow figures for each project are shown below: Model B, which will use a new type of laser disk drive, is considered a high-risk project, while Model A is of average risk.Real Time adds 2 percentage points to arrive at a risk-adjusted discount rate when evaluating a high-risk project.The rate used for average risk projects is 12 percent.Which of the following statements regarding the NPVs for Models A and B is most correct?

• A) NPVA = R380; NPVB = R1,815.
• B) NPVA = R197; NPVB = R1,590.
• C) NPVA = R380; NPVB = R1,590.
• D) NPVA = R5,380; NPVB = R6,590.
• E) None of the above statements is correct.

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Definitions:

Stereotype Threat

The risk of confirming, as self-characteristic, a negative stereotype about one's group, which can reduce the performance in affected individuals.

Self-Fulfilling

Self-fulfilling refers to a prediction or expectation that causes itself to become true due to the behavior that it inspires.

Collective Self-Esteem

Describes the self-evaluation of one's social group or community as a part of an individual's self-worth.

Individual Qualities

Personal attributes or characteristics that distinguish one person from another.