You Are Comparing Two Annuities with Equal Present Values

question 113

Multiple Choice

You are comparing two annuities with equal present values. The applicable discount rate is 7.5%. One annuity pays $5,000 on the first day of each year for twenty years. How much does the second
Annuity pay each year for twenty years if it pays at the end of each year?

• A) $4,651
• B) $5,075
• C) $5,000
• D) $5,375
• E) $5,405

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Definitions:

Legally Free

A status wherein an individual or entity is not under any legal bondage or constraint, enjoying full legal rights and freedoms.

Brutal Owners

Individuals who exercise harsh and cruel control over others, particularly in contexts like slavery or abusive employment practices.

Slave Church

A religious gathering or place of worship created or used by enslaved African Americans, especially during the period of American slavery.

Large Plantations

Extensive agricultural estates typically found in tropical or subtropical regions, where crops like cotton, sugar, and tobacco are cultivated, often with the use of forced or cheap labor.