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

question 46

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

• A)PI = 6.94 percent; reject the project
• B)PI = -7.52 percent; reject the project
• C)PI = -4.21 percent; reject the project
• D)PI = 5.33 percent; accept the project

---

Definitions:

Symbolic Play

A type of play where children use objects, actions, or ideas to represent other objects, actions, or ideas, reflecting their growing cognitive abilities.

Imagery

The use of visually descriptive or figurative language in writing, or the visual mental representation of objects, scenes, or events.

Pretend Play

A form of play where children use their imagination to create scenarios, often involving role-playing and make-believe activities.

Deferred Imitation

The ability to reproduce a behavior observed at an earlier time, without the original model present.