A Firm Has Four Different Investment Options

question 152

Multiple Choice

A firm has four different investment options.Option A will give the firm $10 million at the end of one year,$10 million at the end of two years,and $10 million at the end of three years.Option B will give the firm $5 million at the end of one year,$10 million at the end of two years,and $15 million at the end of three years.Option C will give the firm $15 million at the end of one year,$10 million at the end of two years,and $5 million at the end of three years.Option D will give the firm $21 million at the end of one year,nothing at the end of two years,and $9 million at the end of three years.Which of these options has the highest present value if the rate of interest is 5 percent?

• A)Option A
• B)Option B
• C)Option C
• D)Option D

---

Definitions:

Sensory Registers

Memory systems that hold sensory information for a very short period of time, allowing it to be processed further.

Visual Information

Data received by the eyes and processed by the brain to form images, playing a crucial role in how humans perceive and interact with their environment.

Memory

The cognitive process of encoding, storing, and retrieving information.

Acquisition

Acquisition is the process of obtaining or gaining possession of something, often referring to knowledge, skills, or assets.