A Security Firm Is Offered $80,000 in One Year for Providing

question 25

Multiple Choice

A security firm is offered $80,000 in one year for providing CCTV coverage of a property. The cost of providing this coverage to the security firm is $74,000, payable now, and the interest rate is 8.5%. Should the firm take the contract?

• A) Yes, since net present value (NPV) is positive.
• B) It does not matter whether the contract is taken or not, since NPV = 0.
• C) Yes, since net present value (NPV) is negative.
• D) No, since net present value (NPV) is negative.

---

Definitions:

Withdraw

To withdraw means to remove funds from an account or investment, or to take back an offer or statement.

Retire

To retire means to leave one's job or profession, often due to reaching a certain age or for health reasons, and generally implies ending regular employment to enjoy leisure, hobbies, or other interests.

Invested Funds

Money that has been allocated into various types of assets or investments with the expectation of generating returns.

Beginning

In a finance or accounting context, beginning often refers to the starting point or initial value of an asset, liability, or any financial record at the start of a period.