Virus Stopper Inc

question 12

Multiple Choice

Virus Stopper Inc. ,a supplier of computer safeguard systems,uses a required rate of return of 12 percent to evaluate average risk projects,and it adds or subtracts 2 percentage points to evaluate projects of more or less risk.Currently,two mutually exclusive projects are under consideration.Both have a cost of $200,000 and will last 4 years.Project A,a riskier-than-average project,will produce annual end of year cash flows of $71,104.Project B,of less than average risk,will produce cash flows of $146,411 at the end of Years 3 and 4 only.Virus Stopper should accept

• A) B with a NPV of $10,001.
• B) Both A and B because both have NPVs greater than zero.
• C) B with a NPV of $8,042.
• D) A with a NPV of $7,177.
• E) A with a NPV of $15,968.

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Definitions:

Radical Behaviorists

Proponents of a branch of psychology that emphasizes the study of observable behavior and the environmental factors that influence it, often minimizing or ignoring internal states like thoughts and feelings.

Internal States

Psychological and physiological conditions that exist within an individual, such as emotions, moods, desires, and health status.

Physical Punishment

The use of physical force with the intention of causing a person to experience pain, but not injury, for the purpose of correction or control.

Correlational Studies

Research methods that examine the relationship between two or more variables to determine if a correlation exists, without establishing cause-and-effect.