Techie,Inc.may invest $5 million in a new Star Communicator project.Annual production costs and revenues are projected to be $2 million and $1.5 million,with each growing at 2.0% and 4.0%,respectively.At an interest rate of 5.5%,what is the approximate investment year that will maximize value? (Use static analysis.)
A) Year 20
B) Year 15
C) Year 10
D) Year 5

Question

Quizplus · Accepted Answer

The correct answer is A because the investment year that will maximize value is Year 20.