Nelson Company Owes Money to Nash Company for the Purchase

question 10

Multiple Choice

Nelson Company owes money to Nash Company for the purchase of equipment. Nash Company has given Nelson the following payment options:
I. Immediate payment in full of $38,000.
II. Annual payments of $15,000 made at the end of each of the next three years.
III. A single payment of $48,000 made at the end of three years.
Assume that both Nelson and Nash use a 10% interest rate compounded annually. What option would Nash prefer, and what is the present value of that option?

• A) Option I, $34,542.
• B) Option I, $38,000.
• C) Option II, $37,305.
• D) Option III, $34,164.
• E) Option III, $36,048.

Understand the role and challenges of human resource management in supporting organizational goals and innovation.

Identify the economic trends affecting businesses and employment in Canada.

Acknowledge the importance of digital information systems in effective knowledge management.

Understand the significance of human resource strategies in developing a culture of innovation.

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Definitions:

Comparative Advantage

A principle that states a country should produce and export goods for which it has a lower opportunity cost compared to other countries.

Allocate Resources

The process of distributing available resources among various projects or business units.

Maximize Output

Involves strategies or actions by a firm to produce as much as possible, often while considering constraints like resources, technology, and market demand.

Comparative Advantage

The capability to produce a particular good or service more efficiently than other producers, allowing for trade benefits.