A Firm Has to Decide Between Two Projects That Cost

question 67

Multiple Choice

A firm has to decide between two projects that cost $10,000 each.Project A will provide a revenue $10,700 one year from now,while Project B will provide a revenue of $12,200 two years from now.The interest rate is 10% per year.This firm

• A) chooses project A.
• B) chooses project B.
• C) rejects both projects.
• D) is indifferent between projects A and B.

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Definitions:

Federal Statutes

Laws enacted by the national government of the United States that apply across the country.

Contractual Capacity

The legal ability to enter into contracts; the threshold mental capacity required by law for a party who enters into a contract to be bound by that contract.

Valid Contract

An agreement between parties that meets all legal requirements and is enforceable by law.

Minor

A minor is a person who is under the legal age of majority, typically under 18 years old in many jurisdictions, and is restricted from certain legal rights and responsibilities.