The Present Value of $10,000 to Be Received Each Year

question 12

Multiple Choice

The present value of $10,000 to be received each year for ten years and earning a 14 percent return (rounded) is

• A)$11,600.
• B)$26,000.
• C)$52,160.
• D)$52,436.

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Definitions:

Initial Investment

The amount of money used to start a project, purchase an asset, or invest in a financial instrument, marking the beginning of the investment’s lifecycle.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up over time.

Cash Break-Even

The point at which a business's cash inflows exactly match its cash outflows, exclusive of financing, indicating no net cash gain or loss.

Straight-Line Depreciation

A tactic for apportioning the cost of a physical asset over its effective lifespan in identical yearly expenditures.