Use These Present Value Tables to Answer the Questions That

question 37

Multiple Choice

Use these present value tables to answer the questions that follow.
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Below is a table for the present value of $1 at compound interest.
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$$\begin{array} { c c c c } \text { Year } & 6 \% & 10 \% & 12 \% \\\hline 1 & 0.943 & 0.909 & 0.893 \\2 & 0.890 & 0.826 & 0.797 \\3 & 0.840 & 0.751 & 0.712 \\4 & 0.792 & 0.683 & 0.636 \\5 & 0.747 & 0.621 & 0.567\end{array}$$ Below is a table for the present value of an annuity of $1 at compound interest.
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$$\begin{array} { c c c c } \text { Year } & 6 \% & 10 \% & 12 \% \\\hline 1 & 0.943 & 0.909 & 0.893 \\2 & 1.833 & 1.736 & 1.690 \\3 & 2.673 & 2.487 & 2.402 \\4 & 3.465 & 3.170 & 3.037 \\5 & 4.212 & 3.791 & 3.605\end{array}$$
-Using the tables above, what would be the internal rate of return of an investment of $227,460 that would generate an annual cash inflow of $60,000 for the next five years?

• A) 6%
• B) 10%
• C) 12%
• D) cannot be determined from the data given

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Definitions:

Ethical Action

Behavior guided by moral principles, aiming to promote good and avoid harm.

Principle of Utility

A fundamental concept in utilitarian ethics that suggests actions should be judged as right or wrong based on their outcomes, specifically their ability to produce the greatest happiness for the greatest number of people.

Greatest Happiness

A principle that suggests the best action is the one that maximizes happiness or pleasure for the greatest number of people.

Associated Pleasure

The enjoyment or satisfaction derived from a particular activity, object, or association.