Carte Blanco Company Is Evaluating an Investment of $1,000,000 Which

question 35

True/False

Carte Blanco Company is evaluating an investment of $1,000,000 which will yield cash flows of $257,000 per year for 5 years with no residual value.
$\begin{array}{|l|l|l|l|l|l|l|}\hline \text { Present}\\\text {Value of an}\\\text {Annuity of}\\ \$ 1 \\ \hline &5 \% & 6 \% & 7 \% & 8 \% & 9 \% & 10 \%\\ \hline 1& 0.95 & 0.943 & 0.93 & 0.926 & 0.917 & 0.909 \\\hline 2 & 1.859 & 1.833 & 1.809 & 1.783 & 1.759 & 1.736 \\\hline 3 & 2.729 & 2.673 & 2.624 & 2.577 & 2.531 & 2.487 \\\hline 4 & 3.546 & 3.465 & 3.387 & 3.312 & 3.240 & 3.170 \\\hline 5 & 4.329 & 4.212 & 4.10 d & 3.993 & 3.890 & 3.791 \\\hline\end{array}$


If Carte Blanco has a hurdle rate of 10%, they should accept the investment because its internal rate of return is higher than 10%.

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Definitions:

Conservation

The principle in psychology that physical properties such as volume, mass, and number remain the same despite changes in the forms or appearance.

Stranger Anxiety

A type of discomfort that infants feel when encountering individuals they do not recognize.

Egocentrism

A cognitive bias where an individual is unable to differentiate between their own perspective and that of others, often seen in early childhood development.

Anxious Attachment

A form of insecure attachment characterized by a constant need for reassurance and fear of abandonment.