An Investor Expects to Receive Payments of $3,000 Every 6

question 42

Multiple Choice

An investor expects to receive payments of $3,000 every 6 months for the next 7 years. If the market rate of interest is 4% per year compounded semi-annually, what is the future value of these payments?

• A)$22,302.84
• B)$23,694.87
• C)$47,921.82
• D)$54,875.73

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Definitions:

Salvage Value

The assessed worth of an asset at the expiration of its life of usefulness.

Depreciation Expense

The organized spreading of a tangible asset's expense over the duration of its utility.

Useful Life

The estimated duration a fixed asset is expected to be economically usable, with normal repairs and maintenance.

Straight-Line Method

A depreciation technique that allocates an equal amount of depreciation to each year of the asset's useful life.