Suppose Your Firm Is Considering Investing in a Project with the Cash

question 105

Multiple Choice

Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are three and three and a half years, respectively. $$\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \\\hline \text { Cash Flow } & - 100,000 & 30,000 & 45,000 & 55,000 & 30,000 & 10,000 \\\hline\end{array}$$

• A)2.45 years, accept
• B)2.83 years, accept
• C)3.45 years, accept
• D)3.83 years, reject

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Definitions:

Organizational Effectiveness

The ability of an organization to achieve its goals and objectives efficiently and effectively.

Management Systems

Organized frameworks that are designed to manage an organization's policies, processes, and procedures toward achieving its objectives.

Structural Forms

These are the configurations or arrangements of an organization's or system's components, dictating how it is organized and operates.

Environmental Scanning

The process of gathering information about the external environment to identify and interpret potential trends.