A Business Promises to Pay the Investor of $2000 Today

question 28

Multiple Choice

A business promises to pay the investor of $2000 today for a payment of $500 in one year's time,$1000 in two years' time and $1000 in three years' time.What is the present value of this business opportunity if the interest rate is 5% per year?

• A)$247.06
• B)$253.78
• C)$256.88
• D)$261.07

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Definitions:

Compulsory Binding Arbitration

Binding method of resolving collective bargaining deadlocks by a neutral third party

Collective Bargaining Deadlocks

Situations where negotiations between employers and labor unions fail to reach an agreement, potentially leading to strikes or lockouts.

Collective Bargaining Process

Process of negotiating a collective agreement, including the use of economic pressures by both parties

Strikes

A collective work stoppage initiated by employees as a form of protest, usually in response to workplace grievances.