What Is the Present Value of an Annuity Due of $1000

question 37

Multiple Choice

What is the present value of an annuity due of $1000 per month for 20 years discounted at 9% per annum (assuming monthly compounding) ?

• A)$111 978.54
• B)$111 144.95
• C)$9 950.11
• D)$109 978.54

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Definitions:

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Investment Project

A project or activity that involves spending capital with the expectation of future financial returns.

Firm

A firm is an organization engaged in commercial, industrial, or professional activities, aiming to generate profits from its operations.

Risk-adjusted

This term describes the process of taking financial risks into account when evaluating the potential returns of an investment, leading to a more accurate understanding of its true value.