Use the Information Below to Answer the Following Question(s)

question 70

Multiple Choice

Use the information below to answer the following question(s) :
The owner of the Krusty Krab is considering selling his restaurant and retiring.An investor has offered to buy the Krusty Krab for $350,000 whenever the owner is ready for retirement.The owner is considering the following three alternatives:
1.Sell the restaurant now and retire.
2.Hire someone to manage the restaurant for the next year and retire.This will require the owner to spend $50,000 now,but will generate $100,000 in profit next year.In one year the owner will sell the restaurant for $350,000.
3.Scale back the restaurant's hours and ease into retirement over the next year.This will require the owner to spend $40,000 on expenses now,but will generate $75,000 in profit at the end of the year.In one year the owner will sell the restaurant for $350,000.
-If the interest rate is 7%,the alternative with the lowest NPV is:

• A)Alternative #1 with an NPV of approximately $350,000.
• B)Alternative #2 with an NPV of approximately $370,561.
• C)Alternative #3 with an NPV of approximately $357,196.
• D)Alternative #2 with an NPV of approximately $380,561.

---

Definitions:

Hunting And Gathering

An ancient subsistence strategy involving the hunting of animals and foraging of plant life, oftentimes practiced by nomadic societies.

Foraging Societies

Those in which people live by searching for wild plants and hunting wild animals. Such societies predominated until about 10,000 years ago. Inequality, the division of labor, productivity, and settlement size are very low in such societies.

Service Sector

A segment of the economy that involves providing services rather than producing goods, including industries like banking, healthcare, and education.

Class Inequality

The disparity in access to resources, opportunities, and rights among different social classes.