Damon Is Contemplating Taking a Deal with His Uncle,who Is

question 24

Multiple Choice

Damon is contemplating taking a deal with his uncle,who is a very successful entrepreneur.He must pay his uncle $50,000 this year and an additional $50,000 at the end of both the fifth and tenth year.This would allow him to receive a perpetual annual cashflow of $12,000.What is the NPV of this offer if the interest rate is 10%?

• A)$120,000
• B)$30,000
• C)$220,323.23
• D)$69,676.77
• E)$19,676.77

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Definitions:

Desensitization

The process of reducing sensitivity or responsiveness to a stimulus, typically as a result of repeated exposure to that stimulus.

Reaction Formation

A defense mechanism where an individual behaves in a manner opposite to their true feelings or impulses, often observed in psychological contexts.

Transpersonal Psychologists

Professionals who study the transpersonal, or spiritual, aspects of the human experience, often exploring states of consciousness beyond the ego.

Behaviorists

Psychologists who study and interpret human behavior in terms of observable actions and reactions, often emphasizing the effects of conditioning.