Table 10.4 A Firm Is Evaluating Two Projects That Are Mutually Exclusive

question 21

Multiple Choice

Table 10.4
A firm is evaluating two projects that are mutually exclusive with initial investments and cash flows as follows:
-If the firm in Table 10.4 has a required payback of two (2) years, it should

• A) accept projects A and B.
• B) accept project A and reject B.
• C) reject project A and accept B.
• D) reject both.

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Definitions:

Fundamental Attribution Error

The tendency to make attributions to internal causes when focusing on someone else’s behavior.

Behavior

The action or reaction of an entity (usually a person), in response to external or internal stimuli.

Social Perception

The process by which individuals form impressions and make inferences about other people and social situations based on observable cues and contextual information.

Pygmalion Effect

A psychological phenomenon in which higher expectations lead to an increase in performance.