Ginny Is Considering an Investment Costing $55,000 That Has Cash

question 55

Multiple Choice

Ginny is considering an investment costing $55,000 that has cash flows of $35,000 in Year 2,$36,000 in Year 3,and −$5,000 in Year 4.She requires a rate of return of 8 percent and has a required discounted payback period of three years.Should this project be accepted? Why?

• A)Yes; The project pays back on a discounted basis within the assigned time period and also produces a positive NPV.
• B)Yes; The discounted payback requirement is met and other methods of analysis are less desirable.
• C)No; Although the project earns more than 8 percent,there is no situation where the project can pay back on a discounted basis within three years.
• D)No; The discounted payback period is too short.
• E)No; The NPV indicates rejection as does DPB when all cash flows are considered.

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Definitions:

Exhaustion Stage

The final stage of the stress response, characterized by a depletion of physical and psychological resources to cope with stress.

Adaptation Stage

The adaptation stage is a phase in stress-related theories where an individual adjusts to stressors, striving to restore balance and coping mechanisms.

Secondary Appraisal

The process of evaluating one's ability to cope with or manage the consequences of a potentially stressful event.

Primary Appraisal

The initial process by which an individual evaluates the significance of a situation or event as a potential threat, challenge, or harm to their wellbeing.