A Snow Plough Will Generate a Net Income of R20

question 3

Multiple Choice

A snow plough will generate a net income of R20 000 per year for its owner.After 8 years, the plough will be worn out and have zero value.The owner has worked out the present value of the net income the snow plough will generate using an interest rate of 10%.Which of the following statements is NOT true?

• A)The present value of the final year's net income is less than R11 000.
• B)The owner would sell the snow plough if she received an offer of R13 000 for it.
• C)The owner would sell the snow plough if she received an offer of R3 500.
• D)The present value of the income of the net income the snow plough will generate over the 8 year period is more than R100 000.

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Definitions:

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The act of looking forward to or expecting something in the future, often involving preparation or foresight.

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