The Depot Is Considering a Project with an Initial Cost

question 14

Multiple Choice

The Depot is considering a project with an initial cost for fixed assets of $279,900 and annual sales of $284,000 for four years.The profit margin is 6.72 percent,and the tax rate is 34 percent.The fixed assets will be depreciated straight-line over the life of the project to a zero book value.The required average accounting rate of return is 14.5 percent.Should this project be accepted or rejected? What is the AAR?

• A)Rejected; 14.81%
• B)Rejected; 13.68%
• C)Rejected; 15.03%
• D)Accepted; 14.81%
• E)Accepted; 13.68%

Understand the concept of utility maximization given a budget constraint.

Analyze the effects of changing prices on consumer's choice between two goods.

Comprehend the relation between the marginal rate of substitution (MRS) and the ratio of prices of goods.

Recognize different types of utility functions and their implications for consumer choice.

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Definitions:

Economic

Pertaining to the production, distribution, and utilization of goods and services, or the financial aspects of a region or society.

Organizational Chart

A diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs.

Proposal

A document that offers a solution to a problem or a course of action in response to a need.

Manager

a person responsible for controlling or administering an organization or group of staff.