A logging company is considering logging an area for a current cost of $500 per acre to obtain a profit the next year of $600 per acre. The market rate of interest is 10 percent. Should the company make the investment?
A) Yes, the future value of the profit is greater than the present value of the cost.
B) No, the future value of the profit is less than the present value of the cost.
C) Yes, the present value of the profit is greater than the present value of the cost.
D) No, the present value of the profit is less than the present value of the cost.
Correct Answer:
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