James Is in an Art Gallery When Will,who Has No

question 30

Multiple Choice

James is in an art gallery when Will,who has no special art expertise,points to a painting and says "That artist is so good.That piece will be worth a fortune in a few years!" James buys the painting,which does not turn out to be valuable.James tries to return the painting and recover his purchase price.A court will

• A)order the art gallery to pay James the full purchase price.
• B)order Will to pay James the full purchase price.
• C)enforce the contract between James and the art gallery.
• D)enforce the contract between James and the art gallery,but order Will to pay James the full purchase price.

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Definitions:

Net Present Value

A valuation method used to determine the attractiveness of an investment opportunity, calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Profitability Index

A financial metric used to evaluate the desirability of an investment or project, calculated as the present value of future cash flows divided by the initial investment cost.

Discounted Payback

is a capital budgeting method that calculates the period of time required for the discounted cash flows from a project to recoup its initial cost.

Wholesale Book Outlet

A distributor that sells books in large quantities at discounted prices, primarily to retailers, libraries, and educational institutions.