What Is the Present Value of a $7,000 Payment Made

question 123

Multiple Choice

What is the present value of a $7,000 payment made in six years when the discount rate is 4 percent?

• A) $5,290.42
• B) $5,532.20
• C) $5,802.82
• D) $6,103.73

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Definitions:

Accounting Profits

The financial gain calculated by subtracting total explicit costs from total revenue, using generally accepted accounting principles (GAAP).

Perfectly Competitive Industry

This refers to a market structure where numerous small firms compete against each other with no single company dominating the market, selling identical products, and having easy market entry and exit.

Perfectly Competitive Firm

A business that operates in a market where there are many buyers and sellers, the products are homogeneous, and there are no barriers to entry or exit.

Total Revenue

The total amount of money received by a company for goods sold or services provided during a specific period; calculated as the quantity sold multiplied by the sale price.