If X Is the Actual Amount of Income or Receipts

question 178

Multiple Choice

If X is the actual amount of income or receipts and i is the interest rate (in decimals) that could be earned on alternative uses of money that face the same risk, the present value of X one year from now is computed by

• A)X/(1-i).
• B)X/(1+i).
• C)i/(1+X).
• D)(X)(1 + i).
• E)(i)(1 + X).

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Definitions:

Profit Maximization

The process or strategy employed by a firm to determine the price and output level that leads to the highest profit.

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Willingness to Pay

The highest price a person is willing to pay for a product or service, which indicates how much they value it.

Profit Maximization

The procedure through which an enterprise establishes the pricing and output necessary for the maximum profit.