An Investment Will Cost $1,000 on January 1, 20X0 and Will

question 25

Multiple Choice

An investment will cost $1,000 on January 1, 20X0 and will offer the following payouts: What is the NPV of this investment if alternative investments offer an APR of 6%? Round your answer to the nearest dollar.

• A)+$30
• B)+$74
• C)-$35
• D)-$23

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Definitions:

Principal Agent Problem

A dilemma in economics and organizational theory where one party (the agent) is supposed to act in the best interest of another party (the principal) but might act in their own interest instead.

Shirking

Working at less than the expected rate of productivity, which reduces output. Shirking is more likely when workers are not monitored, so that the cost of lower output falls on others.

Corporate Business Structure

Corporate business structure refers to the legal organization of a company, often characterized by the issuance of shares, a board of directors, and liability protection for its shareholders.

Productive Contribution

The input or service provided by a factor of production towards the making of goods and services.