A Security Firm Is Offered $80,000 in One Year for Providing

question 4

Multiple Choice

A security firm is offered $80,000 in one year for providing CCTV coverage of a property. The cost of providing this coverage to the security firm is $74,000, payable now, and the interest rate is 8.5%. Should the firm take the contract?

• A) Yes, since net present value (NPV) is negative.
• B) It does not matter whether the contract is taken or not, since NPV = 0.
• C) No, since net present value (NPV) is negative.
• D) Yes, since net present value (NPV) is positive.

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