A Firm Purchased a 15-Year Franchise for a Computer Outlet

question 133

Multiple Choice

A firm purchased a 15-year franchise for a computer outlet store that is expected to generate income at the rate of ​ ​
Dollars per year. If the prevailing interest rate is 9% per year compounded continuously, find the present value of the franchise.
​

• A) $3,264,095
• B) $4,938,398
• C) $3,619,817
• D) $2,240,764
• E) $5,973,418

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Definitions:

Pluralistic Ignorance

A psychological state where individuals mistakenly believe their thoughts, feelings, or behaviors are different from those of the group, often due to a lack of open communication.

Bystander Effect

A social psychological theory that suggests that individuals are less likely to offer help to a victim when other people are present, often due to a diffusion of responsibility.

Diffusion of Responsibility

The phenomenon where individuals in a group are less likely to take action or feel accountable, assuming that others will do so.

Commons Dilemma

A situation in which individuals' short-term selfish interests conflict with long-term group welfare, often relating to resource management.