If the Present Discounted Value of a Payment Is $1,000,000

question 74

Multiple Choice

If the present discounted value of a payment is $1,000,000 and there is a 40 percent chance that the payment will not occur,then the expected value is

• A)$600,000.
• B)$400,000.
• C)$1,000,000.
• D)$1,400,000.

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Definitions:

Recklessly

Acting with a lack of concern for the risk or negative consequences of one's actions.

Airbags

Safety devices in vehicles designed to inflate rapidly in the event of a collision to prevent or reduce injury to passengers by limiting direct impact.

Asymmetric Information

A situation in which one party in a transaction has more or superior information compared to another, leading to potential advantages or disadvantages in the transaction.

Professional Buyers

Individuals or entities specializing in purchasing goods and services for organizations, often aiming to secure the best terms and prices.