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DENIUS [597]
3 years ago
12

You are comparing two investment options that each pay 6 percent interest, compounded annually. Both options will provide you wi

th $12,000 of income. Option A pays $2,000 the first year followed by two annual payments of $5,000 each. Option B pays three annual payments of $4,000 each. Which one of the following statements is correct given these two investment options? Assume a positive discount rate. Both options are of equal value since they both provide $12,000 of income. a. Option A has the higher future value at the end of year three.b. Option B has a higher present value at time zero.c. Option B is a perpetuity.d. Option A is an annuity.
Business
1 answer:
Nesterboy [21]3 years ago
5 0

Answer:

Answer choice b - Option B has a higher present value at time zero is the correct answer.

Explanation:

Option B has a higher present value at time zero is correct

as shown below:

At the end of three years, option A future value = 2000*(1.06)^2+5000*(1.06)^1+5000*(1.06)^0= $12,547

At the end of three years, option B future value = 4000*(1.06)^2+4000*(1.06)^1+4000*(1.06)^0=$12,734

From the calculation above, option B has higher future value, so the first option is wrong.

At time zero, option A present value = 2000/(1.06)^1+5000/(1.06)^2+5000/(1.06)^3= $10,535

At time zero, option B present value = 4000/(1.06)^1+4000/(1.06)^2+4000/(1.06)^3=$10,692

From the calculation above, option B has higher present value, so second option is correct.

The third option is wrong as Option B is not perpetuity as B has three years of life.

The fourth option is wrong as Option A is not annuity as cash flow, amounts is not equal, it varies on an annual basis.

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Cost behavior is useful to managers for all the following except
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if a company is operating at the full production capacity, then to fulfill more demand, the company will have to invest more in the production line.
8 0
3 years ago
hen a monopolist is able to sell its product at different prices, it is engaging in a. distribution pricing. b. quality-adjusted
sertanlavr [38]

Answer:

Price discrimination

Explanation:

Price discrimination is charging customers differently for the same product.

Price discrimination is a type of selling strategy where customers are charged for same goods and services. The seller charges based on what they think that the user is likely to pay.

6 0
3 years ago
According to Hackman and Oldham's job characteristics model, what type of employee would most likely be satisfied and perform at
Rasek [7]

The type of employee that would most likely be satisfied and perform at a high level is motivated employee.

<h3>Who is Hackman and Oldham?</h3>

Richard Hackman and Greg Oldham developed a model which itself motivates employees for the jobs.

The model focuses on the perspective that if the job is not monotonous, it can  motivates the employee and would not feel discouraged to work.

Hence, the type of employee that would most likely be satisfied and perform at a high level is motivated employee.

Read more on about Hackman and Oldham here: brainly.com/question/13103980

#SPJ1

8 0
1 year ago
On December 31, the balance in the office supplies account is $1,300. A physical count shows $510 worth of supplies on hand. Req
madam [21]

Answer:

Date                    Account title                                               Debit          Credit

December 1        Office Supplies Expense                           $790

                            Office Supplies                                                             $790

Explanation:

Office supplies is an asset but when it is used it should be debited to the office supplies expense account because it becomes an expense that should be catered for in the Income statement.

The office expense that is used for the year is:

= Book balance - Physical inventory

= 1,300 - 510

= $790

3 0
2 years ago
An economist would be more likely to argue against reducing inflation if she thought that a. the central bank lacked credibility
Fantom [35]

Answer:

b. the central bank lacked credibility and if bonds were usually indexed for inflation.

Explanation:

Economics can be classified into two (2) categories, namely;

1. Microeconomics can be defined as the study of the effect of price and quantity levels through interactions between individual buyers and sellers in various markets.

Hence, it is focuses on analyzing or evaluating the decisions of consumers (buyers) and those of firms (sellers) such as methods of production, pricing; and the manner in which government policies affect those decisions.

2. Macroeconomics can be defined as the study of behaviors, performance and factors that affect the entire economy. Hence, it focuses on aggregate phenomena such as price level, economic growth, Gross Domestic Product (GDP), inflation, unemployment and national income levels with respect to the central bank, demand or supply shocks, government policies, aggregate spending and savings.

Inflation can be defined as the persistent general rise in the price of goods and services in an economy at a specific period of time.

Generally, inflation usually causes the value of money to fall and as a result, it imposes more cost on an economy.

When this persistent rise in the price of goods and services in an economy becomes rapid, excessive, unbearable and out of control over a period of time, it is generally referred to as hyperinflation.

In conclusion, an economist is more likely to argue against a reduction in inflation if she thought that the central bank lacked credibility and if bonds were usually indexed for inflation.

8 0
2 years ago
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