The Present Value of a Promise to Pay $5, 000

question 146

Multiple Choice

The present value of a promise to pay $5, 000 every year forever when the prevailing interest rate is 10 percent equals

• A)$5, 000
• B)$50, 000
• C)$100, 000
• D)$250, 000
• E)$500, 000

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Definitions:

Compact Bone Tissue

A type of bone tissue that is dense and solid, providing structural strength.

Spongy Bone

Also known as cancellous bone, this is a porous type of bone found at the ends of long bones and in the inner layers of other bones, providing structural support and flexibility.

Trabeculae

Mesh-like structures of supportive or connective tissue found in organs such as the heart, lymph nodes, and spongy bones, aiding in structural support.

Compact Bone

The dense, hard outer layer of bone that gives it strength and houses the osteons, necessary for support and protection.