Which of the Following Decisions Would Involve the Use of the Present

question 64

Multiple Choice

Which of the following decisions would involve the use of the present value of $1?

• A)Your brother buys your car and offers to pay you $500 now or $1,500 in two years
• B)You win a lawsuit and are offered a lump sum payment today of $100,000 or $15,000 a year for 20 years
• C)Your father and mother wish to deposit enough money on the date of your high school graduation to enable you to take a $7,000 cruise when you graduate from college in 4 years
• D)You want to have $1,000,000 in order to retire at age 55,but need to know how much you will need to deposit each year from now until your 55th birthday

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Definitions:

Maximizing Profits

The process or strategy of adjusting operations, costs, and pricing to achieve the highest possible return or net income.

Division Revenues

The total amount of income generated by a specific division or section of a company through its operations and sales.

Parent Company

A company holding a sufficient amount of another firm's voting shares to influence or determine its board of directors, thereby controlling its management and operational decisions.

Incentives

Benefits or rewards offered to encourage specific actions or behaviors.