The Manufacture of Folic Acid Is a Competitive Business

question 41

Multiple Choice

The manufacture of folic acid is a competitive business. A new plant costs $100,000 and lasts for three years. The cash flow from the plant is as follows: Year-1: +43,300, Year-2:
$43,300 and Year-3 = 58,300. (Assume there is no tax.) If the discount rate is 20%, what is the value of the plant at the end of year-2?

• A) $48,600
• B) $-51,600
• C) Zero
• D) None of the above

---

Definitions:

Stone

A hard, solid mineral matter that is used in construction and sculpture for its durability and natural beauty.

Equestrian Statues

Sculptures representing figures, typically historical or heroic, mounted on horseback, symbolizing power and status.

Marcus Aurelius

Roman Emperor from 161 to 180 AD and a Stoic philosopher, known for his work 'Meditations' and his role in the Roman Empire's history.

Rome's Glory

A reference to the period of prosperity and expansive power of the Roman Empire, marked by significant achievements in architecture, engineering, law, and the arts.