Project Ell Requires an Initial Investment of $50,000 and the Produces

question 21

Multiple Choice

Project Ell requires an initial investment of $50,000 and the produces annual cash flows of $30,000, $25,000, and $15,000. Project Ess requires an initial investment of $60,000 and then produces annual cash flows of $25,000 per year for the next ten years. The company ranks projects by their payback periods.

• A) Projects with unequal lives cannot be ranked using the payback method.
• B) Ess will be ranked higher than Ell.
• C) Ell and Ess will be ranked equally.
• D) Ell will be ranked higher than Ess.

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Definitions:

Strictness Error

A bias in performance appraisal characterized by consistently rating employees more harshly than their performance deserves.

Performance Feedback

The process in which employees receive information and evaluation about their work performance from supervisors, peers, or self-assessment.

Problem-Solving Approach

A problem-solving approach involves a step-by-step process of defining the problem, generating alternative solutions, evaluating and selecting the best solution, and implementing it to address the issue or situation faced.