Fishermen's Corp

question 9

Multiple Choice

Fishermen's Corp. is considering purchasing a boat. If the boat was purchased, it is expected to receive $20,000 at the end of the first year, $40,000 at the end of the second year, and $60,000 at the end of the third year within its business. What is the boat worth to Fishermen's Corp today, assume an 8% discount rate.

• A) $120,000
• B) $100,440
• C) $47,640
• D) $98,756

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Definitions:

Value Increase

An appreciation in the worth or market value of an asset or investment over time.

Intrinsic Value

The perceived or calculated true value of an asset, investment, or company based on fundamental analysis without reference to its market value.

Lower Bound

The minimum value that a mathematical function, financial security, or market variable can have.

Call's Value

Represents the price of an option to buy a particular stock or asset at a set price within a specific time frame.