What Continuously Compounded Effective Rate of Interest Will Yield the Same

question 19

Multiple Choice

What continuously compounded effective rate of interest will yield the same present value of a future cash flow as an annual rate of interest of 6.15%?

• A) 5.97%
• B) 6.32%
• C) 4.11%
• D) 8.24%

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Definitions:

S Corporations

A special designation of corporation that allows income to be taxed only at the shareholder level, avoiding double taxation.

Flow-Through Entities

Entities through which income flows to the owners or investors, avoiding corporate income tax.

Schedule E

A tax form used to report income and losses from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.

Rental Days

The number of days a property is rented out or available for rent during a specific period.