Should Tangshan Mining Company Accept a New Project If Its

question 148

Multiple Choice

Should Tangshan Mining company accept a new project if its maximum payback is 3.25 years and its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $700,000 in year 3, and $1,800,000 in year 4?

• A) Yes, since the payback period of the project is less than the maximum acceptable payback period.
• B) No, since the payback period of the project is more than the maximum acceptable payback period.
• C) Yes, since the risk exposure of the project is less than the maximum acceptable risk exposure.
• D) No, since the risk exposure of the project is more than the maximum acceptable risk exposure.

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Definitions:

Schedule Number

A standardized number that indicates the thickness of pipes in accordance with the American National Standards Institute (ANSI).

Wall Thickness

The measurement of the distance between the inner and outer surfaces of a wall.

Nominal Pipe Thread

A standard for threading where the pipe diameter is not the exact diameter but follows a standardized naming convention.

National Pipe Thread

A U.S. standard for tapered threads used on threaded pipes and pipe fittings, designed to create a tight seal.