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

question 74

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 PI decision rule to evaluate this project; should it be accepted or rejected?

• A)-0.39 percent, reject
• B)0.39 percent, accept
• C)-38.88 percent, reject
• D)38.88 percent, accept

Learn about continuous budgeting and its benefit for future planning.

Understand the basic concepts and components of the budgeting process.

Differentiate between various types of budgets within a company's budgeting process.

Recognize the sequence of budget preparation and the interconnectivity of budgets.

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Definitions:

Secondary Reinforcer

A stimulus that has acquired reinforcing properties through associations with primary reinforcers.

Negative Reinforcement

A behavior modification technique that involves the removal of an unpleasant stimulus to increase the likelihood of a desired behavior.

Negative Reinforcement

A process in behavior conditioning where a response or behavior is strengthened by stopping, removing, or avoiding a negative outcome or aversive stimulus.

Punishment

A consequence applied with the intention of reducing or eliminating an undesirable behavior by introducing a negative stimulus.