Suppose an Investment Will Yield $1, 000 After One Year

question 40

Multiple Choice

Suppose an investment will yield $1, 000 after one year and $2, 000 after two years.What is the present value of this investment if the discount rate is 8 percent?

• A)$2, 479.34
• B)$2, 640.60
• C)$2, 727.27
• D)$3, 000
• E)$3, 520

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Definitions:

Fixed Selling

Fixed selling refers to the portion of selling costs that remains unchanged regardless of the volume of goods or services sold.

Financial Advantage

A benefit or edge gained in financial terms, such as lower costs, higher revenues, or investment returns, that contributes to better financial health.

Contribution Margin

The amount of revenue left after deducting all variable costs, indicating the contribution towards covering fixed costs and generating profit.

Fixed Expenses

Costs that do not change in total regardless of changes in the level of business activity.