A Firm Has Three Different Investment Options

question 160

Multiple Choice

A firm has three 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 $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 C will give the firm $30 million at the end of one year, and nothing thereafter. Which of these options has the highest present value?

• A)Option A
• B)Option B
• C)Option C
• D)The answer depends on the rate of interest, which is not specified here.

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The amount of money required to purchase a product or service, determined by factors such as cost of production, market demand, and competition.

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