The Above Table Shows the Future Operating Profits from an Investment

question 19

Multiple Choice

The above table shows the future operating profits from an investment. The future operating profits are earned at the end of e the respective years.
-Refer to the table above. If the discount rate is 5 percent and the cost of the investment is $43,000, which of the following is true regarding a profit- maximizing manager?

• A)The manager should not make the investment because the net present value is negative.
• B)The manager should make the investment because the net present value is positive.
• C)The manager should make the investment because the net present value is negative.
• D)The manager should not make the investment because the net present value is positive.

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Definitions:

Antedated

Refers to something that precedes another thing in time, especially a document or statement that bears a date earlier than the actual date of execution.

HDC Status

A legal term describing the status of a holder in due course, who acquires a negotiable instrument under certain conditions, granting them rights free from many defenses.

Sufficient Consideration

Consideration in contract law that is adequate and meets legal requirements, ensuring the contract is binding and enforceable.

Promissory Note

A financial document in which one party promises to pay another party a specified sum of money at a defined future date or on demand.