A Small Craft Store Located in a Kiosk Expects to Generate

question 6

Multiple Choice

A small craft store located in a kiosk expects to generate annual cash flows of $6,800 for the next three years.At the end of the three years,the business is expected to be sold for $15,000.What is the value of this business at a discount rate of 15 percent?

• A)$30,100.07
• B)$29,408.27
• C)$25,388.67
• D)$17,409.09
• E)$19,477.67

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Definitions:

Theoretical Knowledge

Knowledge that is based on theories and principles, often contrasted with practical knowledge or experience.

Stage Theory

A psychological theory that proposes development occurs in distinct and successive stages, each with its own challenges and characteristics.

Discontinuity

A concept that denotes abrupt changes or breaks in development, patterns, or processes, contrasting with continuous, gradual transformations.

Industry Versus Inferiority

A stage in Erik Erikson's theory of psychosocial development where, typically during childhood, kids gain a sense of competence through completing tasks or they feel inferior if they fail.