If the Interest Rate Is 8 Percent and an Investment

question 93

Multiple Choice

If the interest rate is 8 percent and an investment undertaken and paid for today is expected to yield $3,000 per year (to be received at year end) for each of the next three years, a profit-maximizing decision maker would undertake the investment only as long as the cost remained less than approximately

• A) $5,350.
• B) $7,731.
• C) $8,109.
• D) $9,000.

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Definitions:

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