Compute the Payback Statistic for Project X and Recommend Whether

question 65

Multiple Choice

Compute the payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent and the maximum allowable payback is five years. $$\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Time: } & 0 & 1 & 2 & 3 & 4 & 5 \\\hline \text { Cash flow: } & - 75 & - 75 & 0 & 100 & 75 & 50 \\\hline\end{array}$$

• A)3.67 years, accept
• B)4.67 years, accept
• C)3.67 years, reject
• D)4.67 years, reject

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Definitions:

Attention

The act of concentrating on a specific stimulus while ignoring other irrelevant information.

Cognitive Dissonance

A psychological phenomenon where an individual experiences discomfort from holding two or more conflicting beliefs, attitudes, or values.

Attitude Change Theory

A collection of theoretical frameworks that describe how and why people's attitudes towards objects, ideas, or other people change.

Behaviour Change

The process by which individuals modify aspects of their behavior in response to new information, experiences, or environments.