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Author Question: The purchase of additional physical facilities, such as additional property or a new factory, is an ... (Read 137 times)

fagboi

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on: Jul 10, 2018
The purchase of additional physical facilities, such as additional property or a new factory, is an example of a capital expenditure.
 
  Indicate whether the statement is true or false

Question 2

Mr. Jackson has been awarded a bonus for his outstanding work. His employer offers him a choice of a lump-sum of 5,000 today, or an annuity of 1,250 a year for the next five years.
 
  Which option should Mr. Jackson choose if his opportunity cost is 9 percent?


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irishcancer18

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Reply #1 on: Jul 10, 2018
Answer to Question 1

TRUE

Answer to Question 2

PVA = (1,250/0.09 )  1-1/(1.09 )5 = 4,862.06
Mr. Jackson should choose a lump-sum of 5,000 today.


fagboi

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Reply #2 on: Jul 10, 2018
Thank you :)


irishcancer18

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Reply #3 on: Jul 10, 2018
Happy to help you


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