All Other Things Being Equal, Which of the Following Would

question 26

Multiple Choice

All other things being equal, which of the following would be most attractive to an investor?

• A) A cash outflow of $60,000 in six years.
• B) A cash outflow of $10,000 each year for the next six years.
• C) A cash outflow of $30,000 in year 1 and $30,000 in year 6.
• D) A cash outflow of $60,000 today.
• E) All of these would be equally attractive to an investor.

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Definitions:

Implied Agency

A relationship formed by the actions of the parties that indicates an agency relationship, even without a formal agreement.

Apparent Agency

An agency relationship created by operation of law when one party, by her actions, causes a third party to believe someone is her agent even though that person actually has no authority to act as her agent. Also called agency by estoppel.

Ratification Agency

The process by which a principal approves and accepts the acts of their agent that were done without proper authority or beyond the scope of their authority.

Implied Authority

Power not explicitly granted to an agent but necessary to carry out the agent's duties effectively.