Uptown Developers Is Considering Two Projects

question 22

Multiple Choice

Uptown Developers is considering two projects.Project A consists of building a wholesale book outlet on the firm's downtown lot.Project B consists of building a sit-down restaurant on that same lot.The lot can only accommodate one of the projects.When trying to decide whether to build the book outlet or the restaurant,management should rely most heavily on the analysis results from which one of these methods?

• A)Profitability index
• B)Internal rate of return
• C)Payback
• D)Net present value
• E)Accounting rate of return

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Definitions:

Independent Trials

Independent Trials are experiments or processes in which the outcome of any given trial does not affect the outcome of any other trial.

Poisson Distribution

A probability distribution that measures the probability of a given number of events happening in a fixed interval of time or space.

Probability Distribution

A function in mathematics that calculates the probability of each possible result of an experiment.