For $200,000 You Can Buy a Business That Has Steady

question 49

Multiple Choice

For $200,000 you can buy a business that has steady cash flows and low risk. Given these cash flows and level of risk, you estimate the business will earn a return in excess of its opportunity cost of money. The business

• A) appears economically profitable, and strong consideration should be given to buying it.
• B) looks like a break-even opportunity and should be rejected.
• C) appears to be a losing proposition but should be bought anyway.
• D) appears to be a losing proposition and should not be bought.

Apply discount rates to evaluate and compare different cash flow streams.

Understand the implications of interest compounding frequencies on savings and loan scenarios.

Understand the fundamental concepts and historical roots of different schools of psychology.

Recognize the methodological approaches used by various psychological perspectives.

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Definitions:

Elastic Demand

A situation in which the demand for a product is sensitive to price changes, meaning a small change in price leads to a larger change in quantity demanded.

Price Elasticity

An indicator that measures the impact on the quantity of a good demanded when there is a change in its price level.

Midpoint Method

A technique used to calculate elasticity by averaging the two points on a demand or supply curve and considering the percentage change from the average.

Price Elasticity

A measure of the sensitivity of demand for a product or service to a change in its price.