Assume an Investment Promises to Yield $4,400 After the First

question 13

Multiple Choice

Assume an investment promises to yield $4,400 after the first year, $4,840 after the second year, and $3,993 after the third year.If the market interest rate is i = 10% and is not expected to change over the next three years, what is the present discounted value of this investment?

• A)$13,200
• B)$12,900
• C)$12,030
• D)$11,200
• E)$11,000

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Definitions:

Stocks

Shares of ownership in a corporation, giving holders a claim to part of the company's assets and profits.

Bonds

Debt securities issued by entities, such as corporations or governments, to raise funds, promising to repay the face value plus interest.