Pearson Corporation Makes an Investment Today (January 1, 2012)

question 52

Multiple Choice

Pearson Corporation makes an investment today (January 1, 2012) .They will receive $10,000 every December 31st for the next six years (2012 - 2017) .If Pearson wants to earn 12% on the investment, what is the most they should invest on January 1, 2012?

• A)$41,114.
• B)$46,048.
• C)$81,152.
• D)$90,890.

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Definitions:

Inventory

The goods and materials that a business holds for the ultimate goal of resale or repair.

Depreciation

The gradual decrease in the economic value of the capital stock of a firm, nation, or other entity, either through physical wear and tear or obsolescence.

Net Investment

The total amount of investment in new capital assets minus the depreciation on existing assets, indicating growth in an economy's productive capacity.

Inventory Investment

The change in the stock of goods held by a business for resale or production over a period, part of the investment component in GDP calculation.