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Mary Is in Contract Negotiations with a Publishing House for Her

question 41

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Mary is in contract negotiations with a publishing house for her new novel.She has two options.She may be paid $100,000 up front,and receive royalties that are expected to total $26,000 at the end of each of the next five years.Alternatively,she can receive $200,000 up front and no royalties.Which of the following investment rules would indicate that she should take the former deal,given a discount rate of 8%? Mary is in contract negotiations with a publishing house for her new novel.She has two options.She may be paid $100,000 up front,and receive royalties that are expected to total $26,000 at the end of each of the next five years.Alternatively,she can receive $200,000 up front and no royalties.Which of the following investment rules would indicate that she should take the former deal,given a discount rate of 8%?   A) Rule I only B) Rule III only C) Rules II and III D) Rules I and II E) Rules I and III


Definitions:

Realistic Conflict Theory

A social psychology theory that suggests intergroup conflicts arise from competition over limited resources.

Prejudice

Preconceived opinion that is not based on reason or actual experience.

Segregation

The enforced separation of different racial groups in a country, community, or establishment.

Prejudice

A preconceived opinion or judgment about someone or something that is not based on reason or actual experience.

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