David Has Purchased an Investment That He Expects to Produce

question 40

Multiple Choice

David has purchased an investment that he expects to produce an annual cash flow of $3,000 for five years. He requires an 8% rate of return compounded annually. What is the maximum amount that David can pay and still earn the required rate of return?

• A) $19,008
• B) $15,000
• C) $14,764
• D) $11,978

Recognize the transferability of security interests across state lines.

Understand the specific rules governing security interests in specific types of property such as trademarks, copyrights, patents, chattel paper, and after-acquired property.

Understand and apply exponent rules to simplify expressions.

Perform operations with complex numbers and evaluate their expressions.

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Definitions:

Economic Profits

The surplus remaining after deducting both the explicit and implicit costs from total revenues; represents extra earnings above the next best alternative.

Fair Return

The reasonable profit that a business can expect to make, considering the risk involved.

Pure Monopoly

A market structure where a single firm is the sole producer of a product or service with no close substitutes, giving it significant control over price.

Profit-maximizing Price

The price level at which a company can sell its product or service to maximize its profit, considering cost, demand, and competition.