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

question 52

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 10 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and three and a half years, respectively. Use the payback decision to evaluate this project; should it be accepted or rejected? $$\begin{array} { | l | l | l | l | l | l | l | l | } \hline \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 & 6 \\\hline \begin{array} { l } \text { Cash } \\\text { Flow }\end{array} & - 85,000 & \$ 12,000 & \$ 11,000 & \$ 13,000 & \$ 21,000 & \$ 31,000 & \$ 32,000 \\\hline\end{array}$$

• A)Payback = 4.90 years; reject
• B)Payback = 4.40 years; reject
• C)Payback = 5.80 years; reject
• D)Payback > 6.00 years; reject

Recognize the challenges and motivations of balancing personal and professional life, especially for professional women.

Understand the importance and procedures of publishing research in peer-reviewed journals to contribute to the body of knowledge.

Comprehend the significance of abstracts or executive summaries and their correct sequence in the report writing process.

Recognize the importance of discussing limitations in research and identifying where they are appropriately reported.

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Definitions:

Preferred Choice

The option that is most favorable or desirable to an individual or group based on their values, needs, or available information.

Emotions

Complex psychological states that involve subjective experience, physiological response, and behavioral or expressive response.

Satisficing

A decision-making strategy that involves selecting an option that meets a minimum level of satisfaction, rather than optimizing outcomes.

Alternative

A distinct option or choice among multiple possibilities.