​A Risky $1,000 Investment Is Expected to Generate the Following $\begin{array}{ll}\text {Year }&1&2&3\\&\$600&\$600&\$600\end{array}$

question 42

Essay

​A risky $1,000 investment is expected to generate the following cash flows:
​ $\begin{array}{ll}\text {Year }&1&2&3\\&\$600&\$600&\$600\end{array}$

a. If the firm's cost of capital is 10 percent, should the investment be made?
b. An alternative use for the $1,000 is a three-year U.S. Treasury note that pays $50 annually and repays the $1,000 at maturity for an annual risk-free return of 5 percent. Management believes that the cash inflows from the risky investment are only equivalent to 70 percent of the certain investment. Does this information alter the decision in (a)?

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Definitions:

Workplace Rage

Extreme anger or aggression exhibited by employees, often resulting from stress, frustration, or perceived injustices at work.

Overtly Aggressive Behaviour

Visible, explicit acts of aggression or hostility toward others, without concealment or subtlety.

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Individuals who work together in the same organization, often collaborating or interacting to fulfill job duties.

Job Satisfaction

The level of fulfillment or contentment employees feel towards their jobs.