Scenario 15.6: Consider the Following Decision That Eileen Has to Make

question 126

Multiple Choice

Scenario 15.6:
Consider the following decision that Eileen has to make:
Eileen is considering buying a $4000 computer for her daughter. Eileen hopes that with the computer her daughter's schoolwork will improve so much that in two years time she will be offered a full-ride scholarship to college. The scholarship is paid for four years and is valued at $25,000 per year. Even with the computer the probability that the scholarship will be awarded is 10%.
-Refer to Scenario 15.6. What formula shows the expected NPV of this purchase?

• A) -$4000 + $2500(1/1.1² + 1/1.1³ + 1/1.1⁵ + 1/1.1⁵)
• B) -$4000 + $25,000(1/1.1² + 1/1.1³ + 1/1.1⁵ + 1/1.1⁵)
• C) -$4000 + (4 times $2500)
• D) -$4000 + (4 times $25,000)
• E) 4 *$2500

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Definitions:

Counterculture

A culture, especially among the young, that rejects the dominant societal norms and values, often manifesting in alternative lifestyles and political viewpoints.

Social Control

A mechanism, typically involving laws, norms, and norms enforcement, used by society to regulate individual and group behavior, maintaining social order.

Replication of Privilege

The process through which advantages and privileges are passed down from one generation to the next, perpetuating social inequality.

Cow Worship

Cow Worship refers to the veneration of cows, often viewed as a sacred practice in various cultures and religions, notably Hinduism, where cows are revered as symbols of life and earth.