A New Business Computer Will Generate Net Income of $1,000

question 102

Multiple Choice

A new business computer will generate net income of $1,000 this year,$800 next year,$400 the year after that,and nothing thereafter.Assume that each year's income is received at the end of the year.What is the maximum amount a firm would be willing to pay for the computer?

• A)more than $2,200
• B)$2,200
• C)$1,000
• D)between $1,000 and $2,200
• E)less than $1,000

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Definitions:

JAN Standard

A specification often referring to Joint Army-Navy standards, which are military standards for electronic components and other materials.

Military

A branch of a nation's armed forces trained for combat on land.

Polarized Capacitors

Capacitors that are specifically designed to be used with a particular polarity in DC circuits and can be damaged if connected in reverse.

Electrolytic

A type of capacitor that is polarity sensitive.