The Following Information Pertains to an Investment: Ignore Income

question 70

Multiple Choice

The following information pertains to an investment: Ignore income taxes.The present value of the annual cash flow (rounded) is

• A) $136,822.
• B) $152,538.
• C) $204,884.
• D) $218,592.

---

Definitions:

Fixed Cost

Costs that do not vary with the level of output or activity.

Output

The aggregate production of either goods or services by an organization, commercial sector, or the economy as a whole.

Diminishing Returns Effect

A principle in economics where increasing one factor of production, while keeping others constant, will at some point yield lower per-unit returns.

Variable Cost

Expenses that vary directly with the level of production output, such as raw materials, labor, and energy costs.