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NEW QUESTION: 1
Alabama Pulp Company (APC) can control its environmental pollution using either "Project Old Tech" or
"Project New Tech." Both will do the job, but the actual costs involved with Project New Tech, which uses unproved, new state-of-the-art technology, could be much higher than the expected cost levels. The cash outflows associated with Project Old Tech, which uses standard proven technology, are less risky--they are about as uncertain as the cash flows associated with an average project. APC's cost of capital for average risk projects is normally set at 12 percent, and the company adds 3 percent for high risk projects but subtracts 3 percent for low risk projects. The two projects in question meet the criteriafor high and average risk, but the financial manager is concerned about applying the normal rule to such cost-only projects. You must decide which project to recommend, and you should recommend the one with the lower PV of costs. What is the PV of costs of the better project?
Cash Outflows
Years:01234
Project New Tech1,500315315315315
Project Old Tech600600600600600
A. 2,521
B. 2,543
C. 2,457
D. 2,399
E. 2,422
Answer: E
Explanation:
Explanation/Reference:
Explanation:
Recognize that (1) risky outflows must be discounted at lower rates, and (2) since Project New Tech is risky, it must be discounted at a rate of 12% - 3% = 9%. Project Old Tech must be discounted at 12%.
Tabular solution:
PV(New Tech) = -$1,500 - $315(PVIFA9%,4) = -$1,500 - $315(3.2397) = -$2,520.51. PV(Old Tech)
-$600 - $600(PVIFA12%,4) = -$600 - $600(3.0373) = -$2,422.38. PV(Old Tech) is a smaller outflow than NPV(New Tech), thus, Project Old Tech is the better project.

NEW QUESTION: 2
Statement 1: Disaster Recovery plans eliminate the need for backups on tape or disk.
Statement 2: With the design of the DR plan one should always assume the worst possible scenario.
A. Statement 1 is true; Statement 2 is false.
B. Statement 1 is false; Statement 2 is true.
C. Statement 1 and 2 are false.
D. Statement 1 and 2 are true.
Answer: B

NEW QUESTION: 3

A. Option B
B. Option E
C. Option D
D. Option C
E. Option A
Answer: B

NEW QUESTION: 4
Evaluate the following block of code:

What is the outcome of the above code?
A. It creates an access control list (ACL) with the user ACCT_MGR who gets the CONNECT privilege but not the RESOLVE privilege.
B. It produces an error because the range of ports associated with the hosts has not been specified.
C. It produces an error because a fully qualified host name needs to be specified.
D. It creates an access control list (ACL) with the user ACCT_MGR who gets the CONNECT and RESOLVE privileges.
Answer: D