Brewster's Is Considering a Project with a Life of 5

question 33

Multiple Choice

Brewster's is considering a project with a life of 5 years,an initial cost of $120,000,and a discount rate of 12 percent.The firm expects to sell 2,100 units a year at a cash flow per unit of $20.The firm will have the option to abandon this project after three years at which time it could sell the project for $50,000.At what level of sales should the firm be willing to abandon this project at the end of the third year?

• A)420 units
• B)1,041 units
• C)1,479 units
• D)1,618 units
• E)2,500 units

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Definitions:

Defective Personalities

A pejorative term potentially referring to individuals who exhibit personality traits or behaviors considered abnormal or dysfunctional within their cultural context; however, it is not a widely accepted or respectful term in psychology.

Diffusion of Responsibility

A psychological phenomenon where individuals are less likely to take action or feel a sense of responsibility in the presence of others, often cited in explaining bystander inaction.

Cognitive Model

A psychological framework that emphasizes the importance of an individual's thoughts in determining their feelings and behaviors.

Latane & Darley

Refers to the social psychologists who developed the Bystander Intervention Model, explaining how the presence of others affects an individual's likelihood to help.