Southern Shores Is Considering a Project That Has an Initial

question 87

Multiple Choice

Southern Shores is considering a project that has an initial cost today of $13,000.The project has a two-year life with cash inflows of $7,500 a year.Should the firm opt to wait one year to commence this project,the initial cost will increase by 5 percent and the cash inflows will increase to $8,500 a year.What is the value of the option to wait if the applicable discount rate is 12 percent?

• A)$614.52
• B)$721.56
• C)$963.40
• D)$982.67
• E)$1,021.66

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Definitions:

Task Design

The process of specifying the work activities and processes for a particular job to optimize productivity and quality.

Performance

A measure of how effectively a task or job is executed.

Reward Systems

Mechanisms designed to recognize and reward employees' performance and contribution to the organization.

Organizational Structure

The system that outlines how activities are directed in order to achieve an organization's objectives, including its roles, responsibilities, and communication pathways.