You Are a Hotel Manager, and Are Considering Four Projects

question 114

Multiple Choice

You are a hotel manager, and are considering four projects that yield different payoffs, depending upon whether there is an economic boom or recession.The potential payoffs and corresponding payoffs are summarized in the following table.

-The variance in the returns of project C is

• A)15.
• B)225.
• C)40.
• D)1600.

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Definitions:

Withdrawals Account

An account used to record the amounts withdrawn by the owner from the business for personal use.

Income Summary

An account used during the closing process that summarizes the revenues and expenses of an accounting period to calculate the net income or loss.

Temporary Account

A temporary account is an account that is closed at the end of each accounting period, with its balance transferred to a permanent account.

Real Accounts

Accounts related to assets, liabilities, and equity that are not closed at the end of the accounting period.