PW:Which Asset

If you have assets with present worth of:

PW(A) = 7
PW(B) = -3
PW(C) = .05
PW(D) =-0.1
Which asset do you choose?

Question options:

(A)
(B)
(C)
(D)

Solution:

For this question, we should adhere to two rules.

First rule is that if the present worth of the investment is greater than or equal to 0, then go ahead and buy it.

Second rule is that if this is the case of exclusive choice, we choose the single option that has the largest present worth.

This question is which asset you choose, so this is the case of exclusive choice.

For these rules and reasons, the answer is (A).

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