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:

Dualistic Nature

The concept of two fundamental parts or principles, such as mind and body, in contrast or opposition.

Descartes

René Descartes, a 17th-century French philosopher, mathematician, and scientist, known for his statement "I think, therefore I am" and his contributions to modern philosophy and the development of the Cartesian coordinate system.

Instinct

Instinct denotes the inherent inclination of a living organism towards a particular complex behavior, which is unlearned and often serves survival and reproductive purposes.

Cognition

The act of obtaining knowledge and insights through the faculties of the mind, personal experiences, and sensory input.