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:

Inherent Value

The intrinsic worth of something, independent of its utility or application.

Instrumental Value

Refers to the value that something has as a means to a desired or valued end, not valuable in itself but for what it leads to.

Aesthetic Value

The perceived beauty or artistic importance of something, often influencing human appreciation and conservation efforts.

Planetary Management

A worldview advocating for the management of Earth's resources to meet human needs while ensuring long-term sustainability.