You Have an Investment Opportunity That Will Cost $50,000 Today

question 2

Multiple Choice

You have an investment opportunity that will cost $50,000 today and will return $54,000 in one year.If interest rates are 4%,what is the NPV of this investment?

• A)$1,923
• B)$4,000
• C)$2,000
• D)$50,000
• E)$0

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Definitions:

Time Clocks

Devices used by employers to record the number of hours worked by employees, ensuring accurate tracking of time for payroll purposes.

Incentive Conflict

A situation where parties have different, competing goals. In agency relationships, the different goals of principals and agents is an example of incentive conflict.

Agent

A person who acts on behalf of another individual (a principal). Principal–agent problems are created by the incentive conflict between principals and agents.

Principal

An individual who hires another (an agent) to act on his or her behalf.