Kampgrounds Inc

question 81

Multiple Choice

Kampgrounds Inc.is considering purchasing a parcel of wilderness land near a popular historic site.Although this land will cost Kampgrounds $400,000 today,by renting out wilderness campsites on this land,Kampgrounds expects to make $35,000 at the end of every year indefinitely.If the appropriate discount rate is 8%,then the NPV of this new wilderness campsite is closest to:

• A)-$50,000.
• B)-$37,500.
• C)$37,500.
• D)$50,000.

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Definitions:

Inflation

A general increase in prices and fall in the purchasing value of money.

Total Output

The total quantity of goods and services produced in an economy over a specified period.

Labor Force

The total number of people who are employed or actively seeking employment in an economy.

Union Membership

Individuals who belong to a union, an organization formed for the purpose of representing its members' interests in various employment matters.