Ask Question
15 September, 04:34

g If a firm can earn a profit stream of $50,000 per year for 10 years, that profit stream is worth:1) A) nothing today) less than $500,000 today, but a positive amount. C) $500,000 today. D) more than $500,000 today. E) some amount, but whether it is more, less or the same as $500,000 cannot be determined.

+4
Answers (1)
  1. 15 September, 04:38
    0
    b) less than $500,000 today, but a positive amount.

    Explanation:

    By the virtue of the concepts of compounding and discounting, we understand that $1 today is worth more that $1 in the future.

    Where Pv = Present value

    Fv = Future value

    r = discount rate

    t = time

    Fv = Pv (1 + r) ^t

    As such If a firm can earn a profit stream of $50,000 per year for 10 years, that profit stream is worth less than $500,000 today, but a positive amount.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “g If a firm can earn a profit stream of $50,000 per year for 10 years, that profit stream is worth:1) A) nothing today) less than $500,000 ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers