A Firm Is Considering an Investment That Will Cost $2

question 350

Multiple Choice

A firm is considering an investment that will cost $2 million today and $2 million a year from now. It will generate revenues of $1 million a year for five years, beginning two years from now. If the interest rate is 10 percent, the firm should

• A) not make the investment because the present value of the net revenues is less than the present value of the investment spending.
• B) not make the investment because the present value of the net revenues is less than $4 million.
• C) make the investment because the present value of the net revenues is greater than the present value of the investment.
• D) make the investment because the project will generate a net profit of $1 million.

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Definitions:

Deport Foreigners

The act of expelling individuals who are not citizens from a country, usually for violating immigration laws or posing a threat to national security.

W.E.B. DuBois

An African American sociologist, historian, civil rights activist, and author who co-founded the National Association for the Advancement of Colored People (NAACP) in 1909.

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Describes the segregation or division between racial groups, particularly between blacks and whites in the United States.

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