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%

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Definitions:

Sense of Shame

A painful emotion resulting from the consciousness of something dishonorable, improper, ridiculous, done by oneself or another.

Inhalants

Substances that are inhaled to achieve a psychoactive effect, often used as recreational drugs and can be dangerous or harmful.

Illicit Use Patterns

Illicit use patterns refer to the unauthorized or illegal consumption patterns of substances or engagement in behaviors that are not sanctioned by law.

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A long-lasting condition that can be controlled but not cured, often leading to continual health management over years.