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:

Difference Threshold

The smallest change in stimulation that can be detected 50% of the time by a participant.

Color Receptors

Cells in the retina of the eye that are sensitive to specific wavelengths of light, enabling color vision.

Weber's Law

A principle relating to the perception of change in a given stimulus, stating that the ratio of the increment threshold to the background intensity is a constant.

Spoonfuls Of Sugar

A colloquial expression derived from a popular song, symbolizing that making unpleasant tasks more palatable can increase their acceptability or ease their completion.