How Much Should You Be Willing to Pay for an Account

question 3

Multiple Choice

How much should you be willing to pay for an account today that will have a value of $1,000 in 10 years under continuous compounding if the nominal rate is 10%?

• A)$349.49
• B)$367.88
• C)$386.27
• D)$405.59
• E)$425.87

---

Definitions:

Gross Profit Percentage

A financial ratio showing the proportion of money left over from revenues after accounting for the cost of goods sold.

Contract Price

The total amount agreed upon in a contract for the sale of goods, services, or property.

Involuntary Conversion

The forced exchange of an asset into a different form or property, often due to theft, casualty or condemnation, with potential tax implications.

Deferred Gain

A profit from the sale of property or an investment that has been realized but not recognized for tax purposes in the current period.