Figure 14-6. Present Value of $1

question 145

Multiple Choice

Figure 14-6. Present value of $1
Present value of an Annuity of $1
Refer to Figure 14-6.Roman Knoze is considering two investments.Each will cost $20,000 initially.Project 1 will return annual cash flows of $10,000 in each of three years.Project 2 will return $5,000 in year 1,$10,000 in year 2,and $15,000 in year 3.Roman requires a minimum rate of return of 10 percent.What is the net present value of Project 1? (Note: there may be a rounding error depending on the table you use to compute your answer.Choose the answer closest to the one you calculate.)

• A)$20,000
• B)$25,670
• C)$4,860
• D)$22,530
• E)$2,530

Identify examples and reasons for government-created monopolies.

Evaluate the effectiveness and consequences of government interventions in monopoly markets.

Recognize the conditions and strategies for price discrimination by monopolists.

Compare the economic outcomes of firms in perfectly competitive markets versus those in monopoly markets.

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Definitions:

Just The Right Size

"Just The Right Size" refers to an organization or system designed to meet its objectives efficiently without excess capacity or resources, optimizing performance.

Tracking System

A method or technology used to monitor and record the movement or progress of objects, people, or information.

Liquidity Ratio

A financial metric used to determine an entity's ability to pay off its short-term obligations with its liquid assets.

Asset Management Ratio

Financial ratios that measure how effectively a company manages its assets to produce sales and maximize profitability.