The Following Show Four Mutually Exclusive Investments

question 105

Multiple Choice

The following show four mutually exclusive investments.Which is the best investment?

• A)Initial investment: $1.1 million;Cash flow in year 1: $160,000;Annual Growth Rate: 2%;Cost of Capital: 9.0%
• B)Initial investment: $1.2 million;Cash flow in year 1: $150,000;Annual Growth Rate: 2%;Cost of Capital:7.0%
• C)Initial investment: $1.3 million;Cash flow in year 1: $160,000;Annual Growth Rate: 1%;Cost of Capital: 6%
• D)Initial investment: $1.4 million;Cash flow in year 1: $150,000;Annual Growth Rate: 2%;Cost of Capital: 8%

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Definitions:

Predicted Exam Scores

Estimates or forecasts of the scores individuals are expected to achieve on an exam based on a model or prior performance.

Y-intercept

The point where a line or curve crosses the y-axis of a graph.

Null Hypothesis

A statement or hypothesis that assumes there is no significant difference or relationship between certain observed phenomena or variables.

Household Income

The combined gross income of all members of a household, typically measured over a year.