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

question 33

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 12 percent, and that the maximum allowable payback and discounted payback statistic for the project are two and two and a half years, respectively. $$\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Time } & 0 & 1 & 2 & 3 & 4 & \\\hline \text { Cash Flow } & - 125,000 & 65,000 & 78,000 & 105,000 & 105,000 & 25,000 \\\hline\end{array}$$

• A)12.00 percent, reject
• B)31.21 percent, accept
• C)54.22 percent, accept
• D)80.67 percent, accept

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Definitions:

Upward Communication

The flow of information from lower levels of a hierarchy to higher levels, often involving feedback, suggestions, or reports from employees to management.

Employees

Individuals who are hired to perform specific jobs in exchange for payment.

Managers

Individuals responsible for controlling or administering all or part of a company or similar organization.

Manage Conflict

The process of identifying and addressing differences that arise in a group, aiming to reach an agreement or solution.