Use the Following Information to Answer the Question(s)below

question 37

Multiple Choice

Use the following information to answer the question(s) below.
Nielson Motors is considering an opportunity that requires an investment of $1,000,000 today and will provide $250,000 one year from now,$450,000 two years from now,and $650,000 three years from now.
-If the appropriate interest rate is 10%,then Nielson Motors should:

• A)invest in this opportunity since the NPV is positive.
• B)not invest in this opportunity since the NPV is positive.
• C)invest in this opportunity since the NPV is negative.
• D)not invest in this opportunity since the NPV is negative.

Analyze the conditions for least-cost production and resource allocation.

Grasp the implications of different cost industries (increasing, decreasing, and constant-cost industries) on the long-run supply curve.

Identify the characteristics and outcomes of purely competitive markets in long-run equilibrium.

Recognize the role of marginal cost, average total cost, and price in achieving productive and allocative efficiency.

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Definitions:

Rate of Return

measures the gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost.

Profit Generated

The total amount of financial gain made by a business after all expenses have been subtracted from total sales.

Controllable Margin

The portion of profit or margin over which management has control, often excluding fixed costs.

Average Assets

A financial metric calculated by taking the average of a company's total assets at the beginning and end of an accounting period, used to assess performance efficiency.