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:

Financial Incentives

Monetary rewards used to motivate individuals or groups to achieve specific goals or improve performance.

Recognition

The act of acknowledging or rewarding employees for their achievements, performance, or contributions at the workplace.

Positive Reinforcement

The act of encouraging a desired behavior by offering a rewarding stimulus immediately after the behavior occurs.

Intrinsic Motivation

The motivation that comes from within an individual to perform a task because it is inherently interesting or enjoyable, rather than for some separable consequence.