Project H Requires an Initial Investment of $100,000 and Produces

question 13

Multiple Choice

Project H requires an initial investment of $100,000 and produces annual cash flows of $50,000, $40,000, and $30,000. Project T requires an initial investment of $100,000 and the produces annual cash flows of $30,000, $40,000, and $50,000. The projects are mutually exclusive. The company accepts projects with payback periods of 3 years or less.

• A) Project H will be accepted.
• B) Project T will be accepted.
• C) H and T will both be accepted.
• D) Neither projected will be accepted.

---

Definitions:

Head of Household

A filing status for individuals who are unmarried and pay more than half of the costs of keeping up a home for themselves and a qualifying individual.

Dependency Exemption

A tax deduction for taxpayers who support dependents, significantly reduced with the Tax Cuts and Jobs Act of 2017.

Support

In tax terms, support refers to the financial assistance provided for the maintenance of a person, often considered in dependency exemptions.

Life Insurance Premiums

The payments made to an insurance company in exchange for life insurance coverage, which can sometimes be tax-deductible.