The Interest Rate Is 10

question 22

Multiple Choice

The interest rate is 10%.A certain piece of land can be used for a parking lot, in which case there are no construction costs and it will yield a net return of $5,000 per year forever starting one year from now.Or it can have a house built on it.Building a house would cost $50,000 now.If a house is built on the lot, it will yield a stream of net income equal to $12,000 per year starting one year from now.No other uses are contemplated.The theory of asset markets predicts that the lot will sell for

• A)$120,000 and a house will be built on it.
• B)$50,000 and it will be used as a parking lot.
• C)$70,000 and a house will be built on it.
• D)$13,200 and a house will be built on it.
• E)$80,000 and it will be used as a parking lot.

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Definitions:

Time-Driven

Describes processes or activities where the primary factor or measurement is time, often used in various management and productivity contexts.

Customer Service

The support and guidance offered by a firm to its customers or users of its goods or services.

Time-Driven

This refers to a method or activity that is determined, scheduled, or measured based on the passage of time, often used in costing and process management.

Activity-Based Costing

A costing method that assigns costs to products or services based on the resources they consume, aiming for more accurate costing and insights.