You Would Like to Invest in the Following Project

question 40

Multiple Choice

You would like to invest in the following project. Victoria,your boss,insists that only projects that can return at least $1.10 in today's dollars for every $1 invested can be accepted.She also insists on applying a 10% discount rate to all cash flows.Based on these criteria,you should:

• A)accept the project because it returns almost $1.22 for every $1 invested.
• B)accept the project because it has a positive PI.
• C)accept the project because the NPV is $2,851.
• D)reject the project because the PI is 1.05.
• E)reject the project because the IRR exceeds 10%.

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Definitions:

Retail Inventory Method

An accounting method used by retailers to estimate inventory value by converting retail prices to cost values.

Physical Count of Inventory

The manual process of counting all the physical goods a company has in stock at a specific time.

Safeguarding Inventory

Measures and policies implemented to protect company inventory from theft, damage, and other losses.

Physical Devices

Tangible pieces of hardware that are used for specific functions, often within technological or manufacturing settings.