Project Black Swan Requires an Initial Investment of $115,000

question 88

Multiple Choice

Project Black Swan requires an initial investment of $115,000. It has positive cash flows of $140,000 for each of the next two years. Because of major demolition and environmental clean-up costs, cash flow for the third and final year of the project is $(170,000) . The company accepts all projects with a payback period of 2 years or less.

• A) The payback rule would reject this project because of its risks are too high.
• B) The payback rule would reject this project because all negative cash flows are added together.
• C) If strictly applied, the payback rule would reject this project.
• D) If strictly applied, the payback rule would accept this project.

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Definitions:

Alienation

A state of feeling estranged or disconnected from others or oneself, often resulting in feelings of isolation and loneliness.

Existential Therapy

A form of psychotherapy that emphasizes personal responsibility and the freedom to shape one's life, focusing on the individual's experience in the present moment.

Placebo Effect

A psychological and physiological response where individuals experience a perceived improvement in their condition solely because they believe they are receiving treatment.

Authenticity

The quality of being genuine or true to one's own personality, spirit, or character, often considered vital for mental health and personal growth.