Exhibit 14.1 The Following Questions Are Based on the Information Below

question 41

Multiple Choice

Exhibit 14.1
The following questions are based on the information below.
An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem.
-Refer to Exhibit 14.1. What formula should go in cell D5 to implement the maximin decision rule?

• A) =MAX(MIN(B5:C5))
• B) =MIN(B5:C5)
• C) =AVERAGE(B5:C5)
• D) =MAX(B5:C5)

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Definitions:

Straight-Line Method

A depreciation technique that allocates an equal amount of the asset's cost to each year of its useful life.

Residual Value

The estimated value of an asset at the end of its useful life.

Internally Generated Goodwill

The increase in value of a business due to factors like reputation, brand, customer base, and relationships that are developed internally over time and not acquired or purchased.

Intangible Asset

An asset that lacks physical substance and usually represents legal rights or competitive advantages (e.g., patents, trademarks, copyrights).