A Company Has Identified the Following Investments as Looking Promising

question 111

Multiple Choice

A company has identified the following investments as looking promising.Each requires an initial investment of $1.2 million.Which is the best investment?

• A)a perpetuity that generates a cash flow at the end of year 1 of $100,000,has a growth rate of 1.25%,and a cost of capital of 10%
• B)a perpetuity that generates a cash flow at the end of year 1 of $800,000,has a growth rate of 2.25%,and a cost of capital of 12%
• C)an investment that generates a cash flow of $400,000 at the end of each of the next five years,when the cost of capital is 6%
• D)an investment that generates a cash flow of $200,000 at the end of each of the next ten years,when the cost of capital is 6%
• E)an investment that generates a cash flow of $200,000 at the end of each of the next ten years,when the cost of capital is 2%

Apply knowledge of cash flow statement preparation to evaluate the financial health of a company.

Recognize the requirements and recommendations of financial standards (e.g., IASB) regarding cash flow statements.

Understand the importance and principles of responding to business communications effectively, including adjustments, claims, and inquiries.

Learn the strategies for writing effective business messages, including the application of direct and indirect strategies based on the situation.

---

Definitions:

Mob

A crowd that gathers to achieve an emotionally driven goal.

Social Movements

Collective efforts by groups of people to drive or resist changes in society, often aiming at social or political reforms.

Collective Behaviour

Actions or behaviors of a group of people who are in direct or indirect contact and engage in similar activities or practices, often spontaneous and with uncertain outcomes.

Expressive Crowds

Groups of people who gather primarily for the spontaneous expression of emotion, such as joy, anger, or mourning, often in response to an event or communal sentiment.