You Have Just Been Hired as a Consultant to Help

question 56

Essay

You have just been hired as a consultant to help a firm to decide which of three options to take to maximize the value of the firm over the next three years.The following table shows year-end profits for each option.Interest rates are expected to be stable at 8 percent over the next three years.
$$\begin{array} { | c | c | c | c | } \hline \text { Option } & \text { Profits in Year 1 } & \text { Profits in Year } 2 & \text { Frofits in Year 3 } \\\hline \text { A } & \$ 10,000 & \$ 80,000 & \$ 90,000 \\\hline \text { B } & \$ 50,000 & \$ 90,000 & \$ 100,000 \\\hline \text { C } & \$ 30,000 & \$ 100,000 & \$ 115,000 \\\hline\end{array}$$ a.Discuss the difference in the profits associated with each option.Provide an example of real-world options that might generate such profit streams.
b.Which option has the greatest present value?

Apply exchange rate information to calculate the impact on import prices.

Solve complex proportions involving multiple variables.

Calculate the data storage capacity and utilization.

Understand and apply the concept of investment appreciation in the stock market.

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Definitions:

Tariffs

Taxes on imports and exports between countries.

Duties

Responsibilities, tasks, or functions that an individual or organization is required or expected to perform.

Radio-Frequency Identification

A technology using electromagnetic fields to automatically identify and track tags attached to objects.

Monitor Screens

Display panels used for viewing computer output, television broadcasts, or other digital information.