2,500,000 4,000,000 1,000,000,000 The amount would be too big D Question 17 Which of the following statements is TRUE? The principal-agent problem is most severe for the sole propgetorship because there are fewer owners who can monitor the relationship, In the agency model, the owners of corporations are the agents and the stockholders are the principals The problem of motivating one party to act in the best interest of another party is known as the principal-agent problem. Agency relationship is the area of business that deals with how a company conducts its business and implements controls to ensure proper procedures and ethical behavior. Question 18 You want to travel to Europe to visit relatives when you graduate from college three years from now. The trip is expected to cost a total of $10,000 at that time. Your parents have deposit in a CD paying 6% interest annually, maturing three years from now. Aunt Hilda has agreed to finance the balance. If you are going to put Aunt Hilda's gift in an investment earning 10% ov years, how much must she deposit now, so you can visit your relatives at the end of three years? $3,757