ABC Manufacturing Is Evaluating Two Capital Projects

question 117

Essay

ABC Manufacturing is evaluating two capital projects.The company's choice will be based on the profitability index.Project #1 has a present value of cash flows of $200,000 and a net initial investment of $180,000 while Project #2 has a present value of future cash flows of $820,000 and a net initial investment of $800,000.Which project will ABC choose? Why?

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Definitions:

Withholding Reinforcement

A behavioral modification technique where positive reinforcement is intentionally not provided to reduce or eliminate undesired behaviors.

Token Economy

A behavioral intervention that involves rewarding targeted behaviors with tokens, which can later be exchanged for privileges or items.

Intellectual Disabilities

A term describing individuals with significant limitations in both intellectual functioning and in adaptive behavior, which covers many everyday social and practical skills.

Severe

Used to describe something that is of an extreme intensity or seriousness.