According to the Net Present Value (NPV) rule, managers choose to invest if
a. The NPV of the project is less than zero
b. The NPV of the project is greater than zero
c. The NPV of the project is equal to zero
d. The NPV of the project is equal to the cost of capital
QUESTION 2For a firm to maximize total profits through price discrimination, it should
a. charge a low price to high-value consumers and a high price to low-value consumers
b. charge a high price to high-value consumers and a high price to low-value consumers
c. charge a low price to high-value consumers and a low price to low-value consumers
d. charge a high price to high-value consumers and a low price to low-value consumers
QUESTION 3Ricky is thinking about borrowing 10,000 from Fred. He promises Fred cash flows of 5000 for the next three years. If Fred's cost of capital is 10, what is the present value of the stream of cash flows?
a. 9873.45
b. 12,434.26
c. 11,342.76
d. 8677.69
QUESTION 4When a grocery store offers discount coupons in Sunday papers, it is trying to
a. Price discriminate
b. Undercut its competition
c. Reward the frequent readers
d. Provide a social service
QUESTION 5The government is looking to double the living standards of its population in 18 years, what rate of GDP growth would it need to achieve that?
a. 1
b. 2
c. 3
d. 4
QUESTION 6Which of the following is not an example of price discrimination?
a. Senior citizen discount at the movies
b. Grocery coupons
c. Shipping a package further costs more
d. Charging a higher price for ice-cream during the summer and a lower price in the winter
QUESTION 7If GDP is expected to increase at a steady rate of 3 per year, how many years would it take for living standards to double?
a. 10
b. 20
c. 24
d. 30
Quick Reply
