You Are Comparing Two Annuities with Equal Present Values

question 80

Multiple Choice

You are comparing two annuities with equal present values. The applicable discount rate is 7.5%. One annuity pays $5,000 on the first day of each year for twenty years. How much does the second annuity pay each year for twenty years if it pays at the end of each year?

• A) $4,651
• B) $5,075
• C) $5,000
• D) $5,375
• E) $5,405

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Definitions:

Competitive Advantage

The attribute that allows an organization to outperform its competitors.

Organization Strategy

The overarching plan or direction a company adopts to achieve its long-term goals and objectives, taking into account its resources, capabilities, and environment.

Growth Stage

A phase in the product life cycle where a product's market acceptance and sales begin to increase significantly.

OM Strategies

Operational management strategies that focus on improving efficiency, productivity, and competitiveness of an organization's operations.