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March 5, 2015

Homework Help: managerial economics

Posted by sheila on Monday, February 14, 2011 at 1:19pm.

assuming that the firm's goal is to maximize present value of the profits in the subsequent 5 years, which of the following flows of profit would achieve that goal? Justify your answer. Note that the flows are represented by 5-tuples, i.e. five number each of which represents profit in the respective year. Assume that the numbers represent profits in $. Use r=5% for discounting the value of future profits.
a: (1000, 1000, 1000, 1000, 1000)
b: (800, 900, 1000, 1100, 1200)
c: (1200, 1100, 1000, 900, 800)

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