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

question 82

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. $$\begin{array} { l l l l l l l } \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \\\text { Cash Flow } & - 100,000 & 30,000 & 45,000 & 55,000 & 30,000 & 10,000\end{array}$$ Use the payback decision rule to evaluate this project; should it be accepted or rejected?

• 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:

Gift Vouchers

Certificates or cards which can be exchanged for goods or services at specified stores or businesses, often given as a gift.

Contingent Reinforcement

A form of behavior modification where the delivery of reinforcement depends on the occurrence of a specific behavior.

Continuous Reinforcement

A learning process in which a behavior is reinforced every time it occurs, leading to high rates of responding and rapid learning.

Negative Reinforcement

A behavioral reinforcement technique where a negative condition is removed as a reward to strengthen a desired behavior.