-The Figure Above Gives Your Budget Line for Magazines and CDs

question 118

Multiple Choice

-The figure above gives your budget line for magazines and CDs per month. Given that your income equals $60 per month, what is the price of a magazine and the price of a CD?

• A) The price of a magazine is $4 per magazine and the price of a CD is $12 per CD.
• B) The price of a magazine is $12 per magazine and the price of a CD is $6 per CD.
• C) The price of a magazine is $5 per magazine and the price of a CD is $10 per CD.
• D) It is impossible to tell from the information given.

---

Definitions:

Capital Budgeting

The process of planning and evaluating investments in long-term assets, considering the potential returns and strategic fit with the organization's goals.

Straight-Line Depreciation

A method of allocating the cost of an asset evenly over its useful life.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Capital Budgeting

The process of making investment decisions in long-term assets and projects by evaluating their potential financial returns.