Ashton Is Working on a Project at PowerTek Inc

question 27

Multiple Choice

Ashton is working on a project at PowerTek Inc., a well-known multinational corporation. He is using capital budgeting to estimate the project's future cash flows. He finds that the present value of the estimated future cash flows is greater than the cost of the project. How likely is he to gain approval from the board?

• A)He will quite certainly gain approval since the project has a positive net present value.
• B)Approval is probable but not likely as he failed to account for the time value of money.
• C)He will not gain approval as he failed to consider whether the project is leading edge or not.
• D)Approval is probable but not likely as the project has been constructed on estimates instead of facts.

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Definitions:

Perceptions

The process of interpreting sensory information to form an understanding of the environment around us, influenced by experience, beliefs, and behavior.

Persons Versus Situations

A debate in psychology concerning the relative influence of personal traits and situational factors on human behavior.

Behavior

Behavior refers to the actions or reactions of an organism or system, usually in response to the environment, which can be observable or measurable.

Funder

A term often referring to an individual or organization that provides financial resources for projects or research.