Table 12.1 A Corporation Is Assessing the Risk of Two Capital Budgeting

question 29

Multiple Choice

Table 12.1
A corporation is assessing the risk of two capital budgeting proposals. The financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows which are given in the following table. The firm's cost of capital is 10 percent.
-The range of the annual cash inflows for Project A is ________. (See Table 12.1)

• A) $30,000
• B) $10,000
• C) $5,000
• D) $0

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Definitions:

Strangers

Individuals who are not known personally or familiar to someone.

Larger Groups

Describes collections of individuals that exceed the small, interpersonal dynamics of smaller groups, influencing social behavior differently.

Pluralistic Ignorance

A situation in which individuals rely on others to identify a norm but falsely interpret others’ beliefs and feelings, resulting in inaction.

Normative Social Influence

The influence that leads individuals to conform in order to be accepted and liked by their social group.