When evaluating a business decision, an economist will often resort to the use of present value because
A)the profits may not be large enough to warrant the time and attention of the investor.
B)the investment occurs in one time period and the profits in another.
C)the investment is often in one currency and the profits in another.
D)the investment is often under one set of managers and the profits under another.

Question

Quizplus · Accepted Answer

Present value allows for the comparison of the initial investment (which typically occurs in one time period) to the expected profits (which may occur over multiple time periods). This helps the economist determine whether the investment is worth pursuing or not.

When Evaluating a Business Decision, an Economist Will Often Resort