Reference no: EM131340384
1. A decision to invest $1,000,000 with a promise to receive a $100 payment one year from now is:
A. more valuable than receiving $1,000,000 today.
B. less valuable than receiving $1,000,000 today.
C. equal in value to receiving $1,000,000 today.
D. equal in value to receiving $1,000,001 today.
2. ATC has a value of $70,000 in a good economy and $55,000 in a recession. The firm has $60,000 of debt. The probability of a recession is 50 percent. The firm is considering a project that would change the firm values to $73,000 in a good economy and $50,000 in a recession. If the firm accepts this project, the firm value will ______ and shareholder value will ______.
decrease by $1,000; increase by $1,500
increase by $1,500; increase by $1,500
decrease by $2,000; decrease by $2,000
decrease by $1,000; decrease by $1,000
increase by $1,500; decrease by $1,000
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