Present Value: Tommie Harris Is Considering an Investment That Pays

question 27

Multiple Choice

Present value: Tommie Harris is considering an investment that pays 6.5 percent annually. How much must he invest today such that he will have $25,000 in seven years? (Round to the nearest dollar.)

• A) $23,474
• B) $38,850
• C) $26,625
• D) $16,088

---

Definitions:

Market Power

The ability of a company or entity to influence the price and production levels in a market.

Economic Profits

The excess of total revenues over total costs, including both explicit and implicit costs.

Demand Curve

A diagram displaying how the cost of a product is connected to the consumer demand for it.

Cost Functions

A mathematical relationship expressing the cost of production as a function of the quantity of goods produced.