Suppose That a Firm Generates $40,000 of Profit Per Year

question 83

Multiple Choice

Suppose that a firm generates $40,000 of profit per year, and this profit will continue forever. At a 10% interest rate, what is the present discounted value of the firm's profit?

• A) $400,000
• B) $4 million
• C) $4.4 million
• D) $360,000

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Definitions:

Expatriates

Employees who are sent by their employers to live and work in a foreign country for an extended period.

Host-Country Nationals

Employees who are natives of the host country.

Labour Costs

The total sum of all financial expenses associated with the employment of workers, including wages, benefits, and taxes.

Domestic Firm

A company that operates primarily within the borders of its home country and caters to the local market.