The Square Box Is Considering Two Projects,both of Which Have

question 71

Multiple Choice

The Square Box is considering two projects,both of which have an initial cost of $35,000 and total cash inflows of $50,000.The cash inflows of project A are $5,000,$10,000,$15,000,and $20,000 over the next four years,respectively.The cash inflows for project B are $20,000,$15,000,$10,000,and $5,000 over the next four years,respectively.Which one of the following statements is correct if The Square Box requires a 13 percent rate of return and has a required discounted payback period of 3.5 years?

• A)Both projects should be accepted.
• B)Both projects should be rejected.
• C)Project A should be accepted and project B should be rejected.
• D)Project A should be rejected and project B should be accepted.
• E)You should be indifferent to accepting either or both projects.

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Definitions:

External Rewards

Incentives provided by an external source, such as money or praise, that motivate individuals to perform certain tasks.

Tension

A mental or physical state resulting from stress or strain, often characterized by feelings of anxiety or discomfort.

Primary Drives

States of tension or arousal that arise from a biological need and are unlearned.

Reduction

In psychology, it refers to simplifying a complex phenomenon by breaking it down into its component parts for easier study or understanding.