Assuming a 5 percent rate of interest, the present value of a business that generates an annual income of $20,000 is worth
a. $1,000
b. $20,000
c. $400,000
d. $80,000
e. $100,000
C
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Consider the Prisoners' Dilemma game, and suppose one player confesses but the other player does not confess. This outcome is
a. a Nash equilibrium. b. Pareto optimal. c. a Pareto improvement over the outcome where both players confess. d. Pareto-inferior to the outcome where neither player confesses.
The use of a two-part price in a regulated natural monopoly
A) maximizes the deadweight loss. B) allows the firm to maximize profits. C) may make it possible for the firm to obey a marginal cost pricing rule and not go out of business. D) All of the above answers are correct.
A change in the multiplier (k) will change the
A) slope of the IS curve. B) slope and the position of the IS curve. C) slope of the LM curve. D) position of the LM curve.
Which of the following could generate economic profits for perfectly competitive firms in the short run, if they initially earn zero economic profits?
A) a fall in demand B) a unit tax on output C) an increase in total fixed costs D) a decrease in input prices