A Financial Manager Must Choose Between Four Alternative Investments, 1

question 134

Multiple Choice

A financial manager must choose between four alternative investments, 1, 2, 3, and 4. Each asset is expected to provide earnings over a three-year period as described below. $\begin{array}{rrrr}\text { Asset }&\text { Year } 1&\text { Year } 2&\text { Year } 3\\1 & \$ 21,000 & \$ 15,000 & \$ 9,000 \\2 & 9,000 & 15,000 & 21,000 \\3 & 3,000 & 18,000 & 19,000 \\4 & 6,000 & 12,000 & 12,000\end{array}$ Based on the profit maximization goal, the financial manager would choose

• A) Asset 1.
• B) Asset 2.
• C) Asset 3.
• D) Asset 4.

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Definitions:

Levy

An imposed tax, charge, or fine on an individual or a company by a government or authoritative body.

Consumption

Refers to the total amount of goods and services that households and individuals buy and use within an economy.

Complements

Products or services that are used together, enhancing the value or demand of each other when consumed in combination.

Mortgages

Loans specifically designed for purchasing real estate, where the property itself serves as collateral until the loan is paid off.