You Are Due to Receive a Lump-Sum Payment of $2,350

question 28

Multiple Choice

You are due to receive a lump-sum payment of $2,350 in seven years.Assuming a discount rate of 2.5 percent interest, what would be the value of the payment in Year 4?

• A)$1,976.97
• B)$2,182.21
• C)$2,128.98
• D)$2,236.76
• E)$2,292.68

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Definitions:

Signature

A person's name written in a distinctive way as a form of identification in authorizing a document.

Time Draft

A type of financial instrument that allows the payer to delay payment until a specified future date, as indicated on the draft.

Sight Draft

A financial document that demands payment on presentation to the drawee.

Promissory Note

A financial document in which one party promises to pay another party a specified sum of money at a specified time.