The Present Value of a $100 Perpetuity Discounted at 5

question 133

True/False

The present value of a $100 perpetuity discounted at 5% is $5,000.

---

Definitions:

Profit-Maximizing Firm

A company that operates with the objective of making the highest possible profit.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on.

Accounting Profits

The total revenue of a company minus the explicit costs, not including opportunity costs, showing the financial performance.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs.