You Are Thinking About Investing in a Mine That Will

question 55

Multiple Choice

You are thinking about investing in a mine that will produce $10,000 worth of ore in the first year.As the ore closest to the surface is removed it will become more difficult to extract the ore.Therefore,the value of the ore that you mine will decline at a rate of 8% per year forever.If the appropriate interest rate is 6%,then the value of this mining operation is closest to:

• A)$71,429.
• B)$500,000.
• C)$166,667.
• D)This problem cannot be solved.

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Definitions:

Historical Sales Data

Records of past sales activities used to analyze trends, performance, and business growth strategies.

Dependent Variable

In research and experiments, it is the variable that is tested and measured, often to see the effect of changes in an independent variable.

Basic Functions

Fundamental operations or activities crucial for the successful operation or formation of an entity or concept.

Production Concept

The philosophy of a business that concentrates more on the product that the business makes than on customer needs.