An Investor Has the Opportunity to Invest in Four New

question 58

Multiple Choice

An investor has the opportunity to invest in four new retail stores.The amount that can be invested in each store,along with the expected cash flow at the end of the first year,the growth rate of the concern,and the cost of capital is shown for each case.It is assumed each investment will operate in perpetuity after the initial investment.Which investment should the investor choose?

• A)Initial investment: $100,000; Cash flow in year 1: $12,000; Growth Rate: 1.25%; Cost of Capital: 9.0%
• B)Initial investment: $90,000; Cash flow in year 1: $10,000; Growth Rate: 1.50%; Cost of Capital: 9.0%
• C)Initial investment: $80,000; Cash flow in year 1: $8000; Growth Rate: 1.75%; Cost of Capital:8.0%
• D)Initial investment: $60,000; Cash flow in year 1: $6000; Growth Rate: 2.50%; Cost of Capital: 7.5%
• E)Initial investment: $50,000; Cash flow in year 1: $5,000; Growth rate: 2.00%; Cost of Capital: 7.0%

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Definitions:

Overregularization

A phenomenon in language learning in which children apply regular grammatical patterns to words that are exceptions to the rule.

Overextension

A language development error in which a child applies a word to more objects than it actually represents, demonstrating an understanding but not precise use of words.

Oversemanticizing

The process of excessively analyzing or interpreting the meanings of words beyond their direct or literal context.

Gestural Language

A form of non-verbal communication using movements of the hands, arms, or body to convey messages.