You Would Like to Invest in the Following Project Victoria,your Boss,insists That Only Projects That Can Return at Least

question 40

Multiple Choice

You would like to invest in the following project. $$\begin{array} { | l | l | } \hline \text { Year } & \text { Cad Flow } \\\hline 0 & -£ 55,000 \\\hline 1 & £ 30,000 \\\hline 2 & £ 37,000 \\\hline\end{array}$$ Victoria,your boss,insists that only projects that can return at least £1.10 in today's dollars for every £1 invested can be accepted.She also insists on applying a 10% discount rate to all cash flows.Based on these criteria,you should:

• A)accept the project because it returns almost £1.22 for every £1 invested.
• B)accept the project because it has a positive PI.
• C)accept the project because the NPV is £2,851.
• D)reject the project because the PI is 1.05.
• E)reject the project because the IRR exceeds 10% .

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Definitions:

Axis II

A classification within the Diagnostic and Statistical Manual of Mental Disorders (DSM) that deals with personality disorders and mental retardation.

Adjustment Disorder

A type of mental disorder resulting from maladaptive reactions to identifiable stressors, characterized by emotional and behavioral symptoms.

DSM Classification System

The Diagnostic and Statistical Manual of Mental Disorders classification system used by healthcare professionals to diagnose and classify mental disorders.

Etiology

The study or investigation of the causes or origins of a disease or condition.