A Logging Company Is Considering Logging an Area for a Current

question 23

Multiple Choice

A logging company is considering logging an area for a current cost of $500 per acre to obtain a profit the next year of $600 per acre. The market rate of interest is 10 percent. Should the company make the investment?

• A) Yes, the future value of the profit is greater than the present value of the cost.
• B) No, the future value of the profit is less than the present value of the cost.
• C) Yes, the present value of the profit is greater than the present value of the cost.
• D) No, the present value of the profit is less than the present value of the cost.

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Definitions:

Experimental Research

A research method involving the manipulation of variables to establish cause-and-effect relationships in controlled conditions.

Cause And Effect

The relationship between events or things, where one is the result of the other or others.

Observational Research

A research method that involves studying subjects without manipulating the environment, often used to gather data in natural settings.

Piaget's Concept

A theory of cognitive development that outlines how children's ability to think progresses through several stages as they mature.