A Firm Has Three Different Investment Options,each Costing $10 Million

question 125

Multiple Choice

A firm has three different investment options,each costing $10 million.Option A will generate $12 million in revenue at the end of one year.Option B will generate $15 million in revenue at the end of two years.Option C will generate $18 million in revenue at the end of three years.Which option should the firm choose?

• A)Option A
• B)Option B
• C)Option C
• D)The answer depends on the rate of interest.

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Definitions:

Accessories Segment

A part of a business that focuses on products that are meant to complement the main product offerings, often enhancing the user experience.

Fixed Expenses

Costs that do not change with the level of output or activity within a certain period.

Break-Even

The point at which total revenues equal total costs, meaning there is neither profit nor loss.

Sales Dollars

The total monetary value of all sales transactions made by a company within a given period.