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.

Question

a: (1000, 1000, 1000, 1000, 1000)
b: (800, 900, 1000, 1100, 1200)
c: (1200, 1100, 1000, 900, 800)

Answer 1

I believe the answer is C.