Why Is the Personal Decision a Financial Manager Makes as to Whether

question 64

Multiple Choice

Why is the personal decision a financial manager makes as to whether to buy or to rent an apartment as a personal residence most like the professional decision that manager makes as to whether her firm should try to acquire a stake in a fast growing new Internet-based company?

• A)Both decisions involve the purchase of assets.
• B)Both decisions will be made based on what provides the greatest long-term benefit.
• C)Both decisions are vital to the financial health of the decision maker.
• D)Both decisions should be made based upon the tradeoff benefits and costs across time.

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Definitions:

Benefits

Advantages or financial assistance received from employment, government, or insurance, aimed at improving individuals’ well-being.

Costs

The expenses incurred in the production or acquisition of goods and services, including both direct and indirect expenditures.

Inelastic Demand

A situation in which the percentage change in quantity demanded of a good is less than the percentage change in price, indicating low sensitivity to price changes.

Tax Burden

The total amount of taxes that individuals, businesses, or other entities are obligated to pay, often expressed as a percentage of income or GDP.