Answer: C. 0.9
Explanation:
From the question, we are given the information that the firm is investing $1 million and it's increasing profit by $100 thousand for every year, the return gotten will be:
= (100000/1000000 × 100)
= 0.1 × 100
= 10%
The discounting factor will be:
= 1 / (1 + interest rate)
= 1 / (1 + 0.1)
= 1 / 1.1
= 0.9
Therefore, the minimum annual discount factor in which the firm is willing to make the investment is 0.90.
